NPT sees huge gains in Kiwi Property deal
The chairman of National Property Trust, Tony Sewell, describes a proposed deal with Kiwi Property as ‘‘transformational’’.
NPT owns Eastgate Shopping Centre in Christchurch, a mall in Auckland, plus three commercial properties, and is among the smallest and poorest performing property companies on the New Zealand stock exchange.
Kiwi Property is one of the largest NZX property companies, with buildings in Auckland and Wellington.
Sewell took up the NPT chairmanship two weeks ago from Sir John Anderson, who was retiring. Sewell said the deal would give the company horsepower to grow by increasing its size from $170 million to $400m. It was better than any other proposals, he said.
A potential hurdle for dissatisfied NPT shareholders is a requirement for them to invest more money as part of the deal – collectively $94m on a pro-rata basis.
‘‘We’re saying to shareholders this is a particularly good arrangement and we’d like you to invest in it. I’ve had good feedback from institutions and ordinary shareholders.’’
The deal would give the NPT shares a theoretical value of 66 cents each, although the actual price eased to a new low of 60c after the latest announcement, compared with 68c a year ago.
It would enable Kiwi Property to offload to NPT two ‘‘non-core’’ properties: the North City Shopping Centre in Porirua and the Majestic Centre in central Wellington, for a combined $230m.
Two years ago North City managers told the Porirua City Council they feared the Transmission Gully expressway would divert traffic away from the centre.
But Sewell said Porirua was a growth area, and Majestic Centre was a rare opportunity to buy an office building where Kiwi Property had just spent $85m earthquake-strengthening it.
NPT would issue about $48m of new shares to Kiwi Property, depending on the shares’ value at the time of the issue, making Kiwi Property a cornerstone investor with a 19.9 per cent stake. Kiwi Property would also acquire the lucrative management rights with a payment to NPT of $6m.
The deal sidelines another suitor, NZX-listed Augusta Capital, which had also launched a bid to control NPT.
NPT shareholders will vote on the proposal at a meeting on April 21.