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Opportunity to Invest in Auckland’s Hilton Hotel

31 August 2004

St Laurence offers Opportunity to Invest in Auckland’s Hilton Hotel Building on Princes Wharf

St Laurence, the Wellington based investment and finance group, is offering investors an opportunity to acquire an interest in the Hilton Hotel building on Princes Wharf, through a proportionate ownership scheme.

The property comprising the 5-star, 166-room boutique hotel is to be purchased fully leased to Princes Wharf Hotel Limited for $51 million. 1,188 interests in the scheme are being offered at $25,000 each providing a total of $29.7 million of equity with the balance funded by secured borrowings. Investors may purchase one or more interests in the scheme and by doing so will acquire a proportion of the ownership in the property. CB Richard Ellis has valued the property at $52.4 million.

St Laurence Managing Director Kevin Podmore said; “This is an extraordinary opportunity for investors to participate in the ownership of one of the country’s landmark properties. The projected cash return to investors for the first full accounting year is an attractive 9.25%. Furthermore, not only will investors be able to take advantage of depreciation allowances for tax purposes but they will also be able to participate in the Hotel’s performance upside. This type of investment will also provide investors with the prospect of capital growth.”

The property is fully leased to Princes Wharf Hotel Limited, a company that will use the building to manage the business of the Hilton Hotel. Hilton International Co. will continue to operate the Hilton Hotel under a hotel management agreement. The hotel management agreement runs for 15 years from the opening date of 1 June 2001 with a right of extension of 5 years by mutual agreement.

Under the Scheme investors will derive a base rental plus a profit share component based on the Hotel’s performance. Cash distributions will be made quarterly. The initial term of the investment is six years and investors have the right to sell their interest at anytime.

Hilton International is one of the leading international hotel operators and their Princes Wharf Hotel has won numerous international awards. It was voted Best New Zealand CBD Hotel 2004 for the second year running and is rated by Condé Nast Traveler Magazine as one of the top 500 hotels in the world and one of the top 10 best hotels on the Pacific Rim. The hotel has consistently out-performed its peers in terms of average occupancy and daily rates.

“The prime waterfront location; close to the CBD and Viaduct, is unsurpassed and a key attribute when assessing the value of this property and the investment offer. The hotel, which was completed in 2001 has become an architectural icon in Auckland with its position on the tip of Princes Wharf providing the finest waterfront views in Auckland.” …. / 2
“The experience of the hotel manager, coupled with the quality of the hotel and its location point to the hotel continuing to exceed expectations. With New Zealand becoming increasingly popular as a tourist destination, the Tourism Research Council of New Zealand is forecasting average annual arrival growth of 5.7% per year to 2010, providing the potential for the hotel’s operating profit to exceed forecasts and investors to earn more than the projected 9.25% cash return.”

The Offer, which is partially underwritten to $20 million, is being marketed by Bayleys and St Laurence.

“We expect considerable interest in this Offer on the basis of expressions of interest already received from Bayleys clients. A similar investment for the Park Hyatt Hotel in Sydney was rapidly over-subscribed. The other key strength of the Offer is the growing international recognition of New Zealand as a safe haven for tourists. The projected increase in visitor numbers will likely result in a stronger than expected performance for this investment,” Mr Podmore said.

BACKGROUND

St Laurence Limited

St Laurence Limited is an Australasian investment and finance company specialising in property bond issues, fixed interest debenture stock investments, managed funds and syndicated property investments.

Founded in 1994 by its Managing Director Kevin Podmore, St Laurence’s mission is to provide investors with higher yields than bank deposits while minimising the risks normally associated with higher performing investments.

The company’s rapid growth over the past ten years is the result of a disciplined and structured approach to the property and finance markets.

With offices in Wellington and Sydney, St Laurence manages more than $550 million of assets for more than 12,000 investors.

St Laurence is owned by Wellington businessmen Kevin Podmore and Mike O’Sullivan who are both well known in the commercial sector.

Prior to setting up the company Kevin Podmore worked on economic consulting projects for The Treasury and some of New Zealand’s largest private sector companies. Mike O’Sullivan has property management and valuation expertise and established property and valuation firm Rolle Associates Limited.

St Laurence is now focused on growing its business in Australia where it opened an office in Sydney in 2001 and expanding its core business to include funds management.

ENDS

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