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Kiwi Income Property Trust Regulatory Action

22 December 2004

Kiwi Income Property Trust Regulatory Action

On 26 November 2004, Capital Properties New Zealand Ltd announced that proposals would be sought for the purchase of the management rights over the Company's property assets. The Capital Properties board expressed the view that the value of the Company's management rights, as distinct from the value of its property assets, were not properly recognised by the market.

Further, the board expressed the view that the value of the management rights, if sold following a contestable open market process, could be considerably in excess of that recognised in other circumstances. If the board considered that, following receipt of proposals, it was in the best interests of shareholders to sell the management rights then it was likely that they would be sold and the proceeds of sale distributed to shareholders as a return of capital.

On December 21, 2004, Kiwi Income Property Trust (KIP) announced that it had made applications to New Zealand Stock Exchange Ltd (NZX) and the Takeovers Panel in an attempt to procure regulatory intervention to prevent Capital Properties from proceeding with its proposed course of action.

Today, Capital Properties has contacted both the NZX and Takeovers Panel and offered its full co-operation in dealing with KIP's applications.

Prior to proceeding with its initiative to seek proposals for the purchase of the Company's management rights, the Capital Properties board obtained legal advice that it was fully entitled to do so. Further legal advice obtained today again confirms this view.

Capital Properties Chairman, Colin Beyer commented that he and his fellow directors were simply acting in the best interests of all Capital Properties shareholders. KIP's assertion that Capital Properties were using defensive tactics lacked credibility given the absence of any announcement from KIP as to its future intentions.

Mr Beyer also questioned the true motives of Kiwi Income Properties Ltd (KIPL), as the external manager of Kiwi Income Property Trust. "This action looks very much like the external manager of KIP seeking to prevent Capital Properties shareholders from realising the full value of their very valuable management rights in an open contestable process.

We are not surprised by the significant media coverage and KIP unitholder dissension in recent times around the issue of whether KIP's external manager is acting in its own interests rather than in the interests of KIP unitholders. Associated with this is the comparatively poor investment performance they are producing for KIP unitholders. "

ENDS


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