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Dominion Funds Buys Major Shopping Centre

May 26, 2004

Dominion Funds Buys Major Shopping Centre To Anchor New Retail Fund

Property investment group Dominion Funds is purchasing the Johnsonville Shopping Centre in Wellington for $28,975,000 million as a foundation investment to launch a new retail property investment fund.

Dominion Funds Chief Executive Paul Duffy says retail has outperformed both industrial and commercial property in recent years, and Dominion Funds has for some time been seeking a major investment with which to launch a pure retailing investment offer, Dominion Retail Fund Ltd. The new fund will purchase further retail properties when appropriate properties become available. Dominion Retail Fund Ltd will be managed by Dominion Managed Funds Ltd that also manages several investment property funds including Dominion Income Property Fund, Dominion Foundation Property Fund, Property Fund Thirty-one, Tauranga Retail Centre, Penrose Industrial Park, Dominion Newmarket and Commercial Property Investments. The Dominion Funds Group holds industrial, commercial, and retail properties valued at some $500 million.

IDEAL FIRST RETAIL INVESTMENT

Mr Duffy says the Johnsonville Shopping Centre, located just seven kilometres northwest of the Wellington CBD, with a dominant position among desirable growing suburbs, is an attractive asset. It has many major national tenants, and there are opportunities for expansion within the Centre. The topography of the area makes it difficult for a competitor to establish a rival shopping centre serving the same catchment area.

"It is an ideal first property for a retail fund, as it actually consists of 60 separate retail tenancies. No tenant accounts for more than 9% of the rent, and future rent review dates are staggered. Current annual net rental, excluding GST, is $2,840,022, which shows a net rental yield on the purchase of 9.8% on close to 100% occupancy.

"In a single property we secure diversity of tenants, future development possibilities and good potential to increase shopping centre patronage and rentals over time."

The Centre has 6,305 square metres of retail space occupied by a diverse base of big name retailers such as Hallensteins, Bond & Bond, Michael Hill Jeweller, Bennett & Bain, Vodafone, Paper Plus, Camera House, Just Jeans and Whitcoulls. The land area is 20,292 square metres, 82% freehold and 18% leasehold. The site is bounded by three major roads providing multiple entry and exit points for shoppers, and 522 carparks are available for shoppers. There is also good access by road and rail public transport.

Immediately adjacent to the Shopping Centre is a Countdown Supermarket. The supermarket is not part of the property purchased by Dominion but is seamlessly integrated into the Centre. Adjacent to the site is The Warehouse and a Woolworth's Supermarket.

DETAILS OF INVESTMENT OFFER

The opportunity to invest in the new retailing fund will be offered through the national Money Managers network.

Investors will be offered a mixture of Group A Shares and Convertible Notes. Investors will be entitled to receive an 8.25% return (less withholding tax) on their investment, which is to be paid in monthly instalments of interest. The return represents 10.31% pa interest on the Convertible Notes. No dividend will be paid on the Group A Shares in the period up to 31 March 2006 and any dividends thereafter will be conditional on future profitability and capital growth.

The sale of Group A Shares and Convertible Notes will raise $19,250,000 towards the purchase price of the Shopping Centre with the balance funded by a bank loan.

The minimum investment is $10,000, on the basis of one share for every four convertible notes.

A prospectus for the issue of Shares and Convertible Notes has been registered, and is available, with the investment statement, from any branch of Money Managers.

ENDS

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