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Kiwi Income Properties Limited (KIPL), as Manager of Kiwi Income Property Trust (Trust) announced today that it will review its fund management fees. KIPL has also elected to waive the management fee associated with the Trust’s current 19.9% investment in Capital Properties New Zealand Limited (CNZ).

Angus McNaughton, Chief Executive of KIPL said: “We have received very positive feedback from our unit holders regarding the overall performance of the Trust. However, unit holders have also indicated that they would like to see better alignment between management fees and unit holder interests given the scale of the Trust.”

“The aim of the management fee review is to deliver a competitive fee that reflects the scale and strength of the Trust’s $1.1 billion office and retail portfolio. It is anticipated that the review will be complete by the end of March 2005.”

“In the meantime, until the review has been undertaken, we have decided to waive the fees due to KIPL on the CNZ holding. We believe this will be positively received by investors in light of the stake being regarded as an investment rather than an asset directly managed by KIPL,” he said.

“We are very pleased with the performance of the Trust’s investment in CNZ. In line with our expectations, CNZ’s asset values have increased, with NTA rising to $1.18, which is ahead of the Trust’s $1.15 purchase price.”

“Kiwi Income Property Trust’s portfolio expansion and redevelopment during the year, along with strong leasing activity and positive rent reviews, supported an earnings upgrade in November 2004, which has also been positively received by investors. It is also pleasing to note that both the retail and office portfolios have reached record occupancy levels being 98.9% and 99.7% respectively as at 31 December 2004.”

“As a consequence of the Trust’s performance we anticipate a strong positive revaluation of the Trust’s property portfolio. The revaluations will be released to the market when finalised in February.” said Mr McNaughton.

*“*Meanwhile, the management team is continuing to focus on acquisition, divestment, and redevelopment opportunities which will also add value for unit holders. In order to allow greater funding flexibility, the Trust is seeking unit holder approval at an Extraordinary General Meeting on 27 January 2005 to increase the Trust’s gearing limit from 35% to 40%.”

“Given that debt costs less than equity, higher yet conservative gearing will be of benefit to unit holders. The proposed 40% limit is comparable to many other listed New Zealand property entities which have limits ranging up to 50%, and reflects a general trend toward using balance sheet capacity to lower the cost of capital and improve investor returns. We have received strong support from the Trust’s key institutional unit holders for the proposed increase.”

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