Property Portfolio- Asset Revaluations

21 December 2004

MEDIA RELEASE

PROPERTY PORTFOLIO- ASSET REVALUATIONS

On November 26, 2004, Capital Properties announced its intention to undertake a revaluation of its property portfolio to take into account recent substantial rental growth, movement in capitalisation rates precipitated by Australian property investors, and the value of the Company's development opportunities.

Valuation reports have now been received for both the Wellington and Auckland assets from valuers Colliers International and Jones Lang LaSalle respectively. The revaluations indicate that the overall value of the Company's portfolio (excluding Centre City Shopping Centre) is now $485 million, an increase of approximately $57 million or 13% since the last valuations were completed in March 2004. On this basis, net tangible assets per share (NTA) have increased from $0.94 (last reported as at 30 September 2004) to $1.18 per share currently.

Including Centre City Shopping Centre, the total portfolio value is approximately $518.5 million and the portfolio NTA is $1.19 per share.

The Company has also had a valuation completed for the New Defence Building now under construction in Thorndon, Wellington. Based on the valuation by Colliers International, the new building is forecast to add $72.5 million to the value of the Company's portfolio upon commencement of the 18 year lease in early 2007.

The Company continues to progress its other development opportunities in Thorndon which have the potential to increase the value of the Capital Properties portfolio by a further $150 million.

The most significant increase in the recent round of revaluations has occurred with the Company's Wellington assets, which have increased in value by $46 million or 17%. The Company's Auckland assets increased in value by $11 million or 7%. Capital Properties CEO Chris Gudgeon commented that the increase resulted from a combination of factors:

* Recent significant increases in market rents, particularly in Wellington.

* Reduction in market capitalisation rates evidenced by recent asset sales.

* A more positive view of the Wellington office sector by investors generally, particularly the government sector.

* Recognition of the value of Capital Properties development sites.

* Capital Properties historical conservatism in valuing its property assets, in comparison with other listed property companies and trusts.

Mr Gudgeon advised that the valuation reports will now undergo the normal process of internal review before a formal decision on adoption is made by the Capital Properties Board.

Commenting further, Mr Gudgeon added that the market had tended not to differentiate between the NTA for an internally managed property portfolio and the NTA for an externally managed portfolio. To make a true comparison, the NTA for an externally managed property portfolio should be reduced by the capitalisation of the excess management fees payable to the external manager. This effective lack of recognition of the value of Capital Properties internally held management rights has led the Company's board to its decision to seek proposals for the purchase of the management rights over the Company's property assets.

ENDS

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