Kermadec Acquisition and Capital Raising

NZX & MEDIA RELEASE

9 May 2007

Kermadec Property Fund Acquisition and Capital Raising

Kermadec Property Fund Limited (KPF) today announced that it has agreed to acquire an Auckland office building for a purchase price of $20.5 million. To partially fund the acquisition, KPF today successfully completed an institutional placement raising $9.8 million.

The acquisition of the 16 level, City Road office building in Auckland, which went unconditional today, will increase the total property portfolio value as at 14 May 2007 to $125.7 million. The property has a total net lettable area of 6,606 sqm , 4 levels of car parks and 12 levels of office accommodation. The property has a weighted average lease term of 5.5 years and introduces a range of new tenants to the portfolio. Currently the property is 90.5% occupied with a rental underwrite being provided by the vendor on vacant space (9.5%) for a period of 2 years. The purchase price of the property represents a net rental yield of 8.5% pa.

The placement was successfully completed by Forsyth Barr today at a fixed placement price of $1.07 per share and was well supported by institutional and habitual investors. Shares issued under the placement will rank equally in all respects with existing shares in KPF but will not carry any right to KPF’s dividend distribution of 2.61 cents per share for the 4 months to 31 March 2007.

In addition to the institutional placement, KPF intends to implement a share purchase plan to provide eligible New Zealand shareholders with the opportunity to participate in the capital raising associated with the acquisition of the City Road property at a price no more than the price paid under the placement. The share purchase plan will allow shareholders to subscribe for parcels of shares of up to $5,000 per shareholder. More details on the proposed share purchase plan will be announced later this morning.

AFM Holdings Limited and Property Manager Holdings Limited in their capacity as Manager of KPF through the joint venture company, Augusta Funds Management Limited, subscribed for 1,588,686 shares under the placement at the same fixed placement price of $1.07. This will result in AFM Holdings Limited and Property Manager Holdings Limited retaining their aggregate 10.1% interest in KPF (after completion of the share purchase plan).

KPF last week reported an NTA (excluding deferred tax on revaluation gains) of $1.16 per share in its financial results for the four month period to 31 March 2007. KPF’s FY08 gross dividend of 8.65 cents per share is expected to be maintained.

Managing Director Mark Francis, said the acquisition reflects the Company’s objective to grow and develop a more balanced and diversified portfolio of properties while maintaining shareholder cash returns at the upper end of sector yields. The Manager’s commitment to KPF and its strategy is demonstrated through their subscription for shares under the placement.

ENDS

About Kermadec Property Fund

Kermadec Property Fund (KPF.NZ) was listed on the New Zealand Stock Exchange (NZSX) on 11 December 2006, after a successful initial public offering that raised $61,250,000.

Kermadec has a diversified portfolio of seven commercial and industrial properties throughout New Zealand, with a combined value of $105 million.

Over time, it is the intention of the Board to grow the portfolio of properties and develop a more balanced and diversified, non-residential portfolio of New Zealand properties.

Kermadec is managed by Augusta Funds Management Limited.

Portfolio
Brookfields House Auckland
Cook/Nelson Commerical Buildings Auckland
Finance Centre Carpark Auckland
Department for Courts Building Waitakere City
Manukau Business Park Manukau City
Alto Packaging Building Hamilton
Coca-Cola Distribution Warehouse Palmerston North
Kermadec Property Fund’s website address is www.kermadecproperty.co.nz

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