Friday, 29 March 2024

Announcement

GENERAL: NPT: NPT Shareholder Update

04 Apr 2017 12:45NZX
4 April 2017

Dear Shareholder,

Further to the recent Notice of Special Meeting and information mailed to
you, the NPT Board wishes to respond to recent public statements made by Salt
Funds Management (Salt) regarding Kiwi Property Group''s (Kiwi Property)
proposal for the future of NPT, and to offer some context and perspective.

We wish to highlight that the views expressed by Salt, opposing the Kiwi
Property Proposal, are at odds with independent advice, feedback received
from the market including other major shareholders, as well as the views of
the Board.

The NPT Board remains confident in the strength of the Kiwi Property Proposal
and the benefits it provides for shareholders, as well as the longer term
future of NPT. It is the Board''s view that the Kiwi Property Proposal unlocks
a new future for NPT.

Major shareholders of NPT - including Salt - expressed qualified support for
the development of the Kiwi Property Proposal when it was first announced in
December last year.  The fundamental terms of that transaction have not
changed from what was publicly released so we were very surprised to find
Salt changing its position in its recent open letter. We had progressed the
development of the proposal, in part, on the basis of this support.

The NPT Board is recommending the Kiwi Property Proposal to shareholders on
the basis that it:

- is expected to drive a 7% uplift in dividends in this financial year
(FY18);
- more than doubles the size of the NPT Group''s portfolio through a single
transaction, to over $400m, addressing the current limitations arising from
lack of scale;
- increases NPT''s market capitalisation, which is expected to enhance
liquidity and market coverage, and over time we would also expect to reduce
the discount to net asset backing that has been a feature of our share price
for many years;
- will allow NPT to benefit from the considerable resources and expertise of
Kiwi Property;
- aligns the interests of NPT and Kiwi Property, with Kiwi Property becoming
a cornerstone (19.9%) shareholder.  This is expected to incentivise Kiwi
Property''s performance as manager;
- offers commercial certainty, with all agreements now in place between NPT
and Kiwi Property and, as such, is ready to progress immediately subject to
shareholder approval.

In the event that the Kiwi Property Proposal is not accepted, not only will
NPT not realise the benefits of the proposed transactions, but it will also
perpetuate the status quo limiting NPT''s ability to grow and deliver
increased returns to shareholders. We also note that in the process of
evaluating proposals received last year, the NPT Board considered alternative
strategies for maximising shareholder value including winding-up NPT and
returning the net proceeds to shareholders. Under all reasonable assumptions,
the Kiwi Property Proposal delivers significantly better value to
shareholders.

There is currently no alternate strategy or proposal on the table for the
future of NPT that the Board considers comes close to the Kiwi Property
Proposal.

It is somewhat surprising that Salt previously supported a competing proposal
submitted by Augusta Capital (Augusta) on 28 October 2016 (since withdrawn by
Augusta as recently as March 2017), which was significantly weaker than the
Kiwi Property Proposal in key evaluation measures (as demonstrated in the
table below), yet Salt is now opposing the demonstrably superior Kiwi
Property Proposal.

SUMMARY OF ALTERNATIVES
Proposals
Status Quo  Kiwi  Augusta

FY18 dividends (cents per share) 3.60 3.85 3.25
Increase/(decrease) relative to FY17
dividend     0%  7% (10)%
Equity capital raising requirements  NA $94m $193m
Transaction costs     NA  $4.4m   $8.0m
Payment to NPT for management rights  NA    $6.0m $3.5m

1 From Kiwi Property Proposal as detailed in Notice of Meeting to
shareholders.
2 From Augusta Proposal dated 28 October 2016 adjusted for an assumed rights
price of $0.58 per share consistent with the Kiwi Property Proposal.

Resolutions by Augusta to replace current NPT Board members with Augusta''s
own nominees should be very carefully considered. Shareholders may note that:

- there is currently no information regarding proposed new directors''
intentions for NPT, which creates considerable uncertainty, compared to the
clear strategy of the existing Board which is ready to be implemented;
- changes to the Board at this time carry a very high risk of derailing the
Kiwi Property Proposal, even if shareholders vote in favour of the proposal;
- if nominees of Augusta are successful in assuming Board positions they can
make important decisions for the future of NPT. Such decisions could include
agreeing to a perpetual management agreement with another party (not Kiwi
Property) without the need for a shareholder vote. This could pave the way
for an effective backdoor takeover, without any of the controls surrounding
the current process;
- it would likely result in wholesale Board changes and therefore the loss of
all institutional knowledge at Board level;
- the existing Board has already been significantly refreshed, including the
recent change of Chair. Incoming Chair, Tony Sewell, brings superb, directly
relevant experience growing property investment companies which will benefit
NPT.

Thank you for your consideration of these important matters.  If you have any
questions or concerns, please contact your broker, Link Market Services or
NPT directly.

We hope as many shareholders as possible attend the Special Meeting on 21
April and strongly urge you to exercise your vote - either in person or by
proxy - in support of the future of NPT, by voting in favour of the Kiwi
Property Proposal.  Your vote will really make a difference.

Yours sincerely,

Tony Sewell
Chairman
End CA:00299389 For:NPT    Type:GENERAL    Time:2017-04-04 12:45:09
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