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Kermadec to Acquire Finance Centre Podium

Kermadec to Acquire Finance Centre Podium

As foreshadowed at the Company’s Annual Meeting in August 2007, the Finance Centre Podium development has been offered on completion to Kermadec Property Fund Limited (KPF) by a subsidiary of Augusta Group Limited. The subsidiary (a company associated with KPF’s Manager, Augusta Funds Management Limited (AFM)) is deemed to be a related party to KPF.

The Independent Directors of KPF are recommending the purchase to shareholders having obtained favourable valuation advice from Colliers International New Zealand Limited and carefully assessed the wider implications of this acquisition at this time.

The property consisting of retail and office components is situated at Victoria Street & Albert Street in the heart of Auckland’s CBD and adjoins KPF’s existing properties Brookfields House and the Finance Centre Carpark. The property is considered to be a logical extension of the Company’s holdings in a strategic Auckland City location.

The principal features of the proposed transaction are:

* Purchase price of $17.555 million (subject to adjustment) with an initial guaranteed net rental yield of 9% pa on purchase price

* Funding through existing cash of $8.3 million and new debt of $9.4 million

* WALT of 6.2 years with key tenancy under a 12 year lease

* Valuation on completion of $19.1 million (Feb 2008)

* Further valuation upside to $20.1m pending resource consent for further development

* Earnings accretive on settlement (July 2008)

* NTA accretive by 2.0cps based on Colliers valuation of $19.1m

* Cost of new funding at indicative rate of 8.74%, hedged for 5 years

* Gross dividend rate of 8.65 cps expected to be maintained

The proposed transaction is conditional on due diligence and on shareholder approval by way of ordinary resolution.

A shareholder meeting is planned for 6 May 2008 with a Notice of Meeting and supporting documentation to be forwarded to shareholders on 17 April 2008.

Further information is available on the company’s website at or on request from Augusta Funds Management Limited.


See... KPF080318_Analyst_Podium.pdf

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