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National Property Trust Half Year Announcement

PRESS STATEMENT
FOR IMMEDIATE RELEASE
28 January 2005

National Property Trust Half Year Announcement

The first six months of the financial year have seen a continuation of the Manager's 'Added Value' strategy with the commencement of the Goddards Centre redevelopment, agreement reached with the anchor tenant for the redevelopment of the cinema premises in the Rialto Centre, and the acquisition of two other property funds in November 2004.

The Trust's investment criteria include the provision to undertake added value projects up to 10% of its total asset value. The Manager views any benefit derived from that activity as part of the Trust’s normal trading activity. It is therefore appropriate to consider the Net Surplus for a particular period when assessing the performance of the Trust and not just the Net Operating Income.

The unaudited Net Surplus for the six months to 30 November 2004 was $4.026m representing an annualised 7.6 cents per unit, and being a 25% increase on the corresponding period last year. The surplus includes unrealised gains of $1.332m on recent acquisitions and a taxation benefit of $319,000.

Gross rental received for the six months was $10.8m (2003:$11.1m). Net Property Expenses were $2.5m (2003:$2.2m). Direct Costs have increased by $452,000 to $5.9m principally as a result of interest rate rises.

The Manager’s ability to add value to the Trust's investment properties has allowed the Trust to maintain a net tangible asset backing per unit that is above the average issue price of the units whilst still maintaining attractive distribution yields. Whilst the Trust's operating earnings are down in this period the Manager looks forward with confidence to the matching of earnings and dividend distributions in the 2006 financial year.

The Manager predicts that the Trust will further benefit from the current robust property market and anticipates a further increase in property values for the year ended 31 May 2005.

Dividend Distribution

The Trust distributes its income to Unit Holders quarterly. The distribution in respect of the second quarter ended 30 November 2004 represents a gross dividend of 2.1 cents per unit and will be paid to Unit Holders on 28 February 2005. The distributions to Unit Holders for the half year represent a total gross distribution of 4.2 cents per unit.

Dividend Distribution Projection

As advised in the 2004 Annual Report the Trust is projecting a gross distribution for the year of between 8.3 and 8.6 cents per unit.

The Net Operating Income for the year is projected to be between 5.6 and 6.0 cents per unit. This is lower than previously projected. The factors contributing to this include the change in the Rialto Centre's anchor retail tenancy, reduced income during the Goddards redevelopment, delay in achieving full earnings from Eastgate, higher interest rates, capital note renewal costs and the dilution effect of the placement referred to below. The additional funds required to contribute to the projected gross distribution will be made from reserves.

For the year ending 31 May 2006 the projected gross distribution is expected to rise to between 8.5 and 8.8c per unit. This is in line with the projected Net Surplus before Taxation and will not require a subsidy from reserves.

Property Acquisitions

On 30 November 2004 the Trust settled the acquisition of 52-56 Gill Street, New Plymouth and 36-44 Sel Peacock Drive, Henderson, Auckland.

The eight level Gill Street building is a modern building, centrally located in New Plymouth and was previously leased to Inland Revenue. That lease expires on 9 February 2005; however, a new lease at market rentals has been negotiated with the Department for 3 floors of the building. A further floor has been leased to the Ministry of Education and negotiations are close to being finalised for a further 2 levels. The property was revalued at $5.2m subsequent to purchase.

The Trust has also recently acquired a 2,090m2 property close to the Gill Street building, which will initially be utilised for carparking purposes. The site has considerable potential for redevelopment and concept planning has commenced.

The Sel Peacock Drive building is a two level plus basement commercial office building occupied by Child Youth and Family and the Ministry of Social Development on recently renewed leases at market rentals. The property was revalued at $7.5m subsequent to purchase.

The consideration for the purchases was a mixture of cash and equity with a total of 9,002,000 new units being issued to the 595 shareholders of the vendors. The issue price for the new units was the net tangible asset backing per unit of the Trust as at 31 May 2004.

Following these acquisitions the portfolio mix by region is now Christchurch 42%, Auckland 35%, Wellington 13%, central North Island 8% and Dunedin 2%. The portfolio mix by sector is retail 65%, commercial 32% and industrial 3%.

Goddards

The redevelopment of the Goddards Centre in Tauranga commenced in May 2004. This redevelopment will create a dynamic modern and central shopping precinct which will become the retail focal point for the inner city.

Rialto Entertainment will operate a new three screen cinema complex on the upper levels of the centre and Life Pharmacy and Paper Plus are the key retailers on the ground floor together with an international food court featuring five new tenancies.

Stage 1 of the redevelopment opened early in December and the cinemas are scheduled to open in April 2005.

The new Goddards will enhance and complement Tauranga's growing reputation for the very best of boutique shopping in a progressive vibrant environment.

Rialto Centre

In early November the Trust announced that it had secured Village Rialto Cinemas (Rialto) for a new 20 year tenancy at the Rialto Centre in Auckland thus cementing Rialto's position as an important anchor tenant in the Centre.

The Trust intends to spend approximately $2.4m refurbishing the Centre and has added a further two screens to the complex. Rialto will refit the cinemas including new seating and an enlarged concession/ticketing foyer.

The Trust also signed a new six year lease with the Australian women's fashion retailer Supré for approximately 1,500m2 spread over two floors in the Centre. Supré commence trading in February 2005. This strong replacement tenant was signed within two weeks of the closure of Lifestyle Sports.

Capital Notes

The Trust has $25m of Capital Notes (the Notes) on issue through its wholly owned subsidiary NPT Capital Limited. The first term of the Notes ended on 30 November 2004. NPT Capital made an offer to existing Note Holders giving them the opportunity to renew and "top up" their holdings to replace any Notes that were repaid.

A total value of $23,321,667 in Notes was renewed and the balance was placed under the top up offer. This has resulted in the $25m of Notes being issued for a further three years to 30 November 2007 at an unchanged interest rate of 9.5% per annum.

The Manager was extremely pleased with the confidence that Note Holders displayed in both NPT Capital and the Trust.

Placement

Prior to the renewal of the capital notes the Trust made a placement of 6,709,334 units with institutions and habitual investors. This placement was at 88 cents per unit and was necessary to provide the appropriate cash reserves to support any redemptions that may have been required as a result of the Capital Note renewal.

Following the placement and the issue of units in respect of the New Plymouth and Henderson acquisitions the total number of units on issue at 30 November 2004 was 120,453,563.

Communication

Meetings of Unit Holders were held in Auckland, Tauranga and Christchurch during September 2004. The meetings were held to review the annual report, including the financial statements for the year ended 31 May 2004, and to provide an update of the Trust’s activities.

The Trust holds such meetings to give Unit Holders the opportunity to ask questions of the Manager. The good attendance at all meetings indicates the value that Unit Holders attach to the opportunity and is appreciated by the Manager.

Outlook

The last two financial years have been a transition period where the Trust has built a solid base of quality properties with the potential to increase income over time. The projection for the financial year ended 31 May 2006 sees this investment philosophy bearing fruit.

The Manager has also identified within the existing portfolio a series of added value projects that the Trust intends to undertake during the 2006 financial year. These include the additional development opportunity at Eastgate, the remodelling and extension of the Gill Street New Plymouth property, the redevelopment of the Ocean Boulevard property in Napier, the redevelopment of the New Plymouth car parking property and the potential for a joint venture to undertake a CBD apartment development on surplus land associated with the Torrens House property in Christchurch.

The end value of the proposed projects is approximately $50m with a projected development margin of approximately 20%. The proposed projects will be funded by a combination of debt and equity.

ENDS

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