GENERAL: APT: AMP NZ Office Trust proposes key strategic changes

26 Feb 2010 9:33 am

APT 26/02/2010 GENERAL

REL: 0933 HRS AMP NZ Office Trust

GENERAL: APT: AMP NZ Office Trust proposes key strategic changes

AMP NZ Office Trust proposes key strategic changes

AMP NZ Office Trust (ANZO) today proposed significant changes to the governance and control of the vehicle for the benefit of unit holders, to be approved by unit holders by 30 June 2010. These include a proposed new corporate structure and governance model that clearly separates the interests of ANZO and the Manager and a management fee structure that strongly incentivises the Manager to deliver the best investment outcome for ANZO's investors.

"Market conditions have changed markedly in recent years and the proposed changes are the outcome of a strategic review of the business initiated in 2009 to ensure ANZO is appropriately structured and best positioned to maximise its attractiveness to current and future investors," said Craig Stobo, Chairman of the Board of ANZO's Manager, AMP Haumi Management Ltd.

The proposed corporate governance structure provides clear separation between the interests of the investment vehicle and those of the Manager, with strong alignment, greater transparency and separate governance and control over each. Key features include:

- A Board of directors including a majority of independent directors (including the Chair), nominated and elected by shareholders, with control of and accountability for the governance and performance of the investment entity. - A company structure subject to corporate law, NZX listing rules (including the Takeovers Code) and related investment/market regulation in the normal way. - The Company will remain subject to the rigorous disclosure and reporting requirements of listed entities.

"Not only do these changes strengthen ANZO's competitiveness as an investment proposition, they also represent ANZO's commitment to stepping up to the benchmarks identified by the Capital Markets Taskforce," said Mr. Stobo.

ANZO will continue to benefit from the extensive experience and capability of AMP Haumi Management Limited under a robust external management contract. The contract will specify the role, responsibility and remuneration of the Manager, establish performance standards and delivery criteria, and will set out the provisions as to management tenure and change of Manager.

The new management fee structure proposed - which would be effective from 1 July 2009 - creates clear and transparent incentives for the Manager to act in the best interests of all investors in ANZO by introducing an at risk component that rewards superior investment performance, links the returns of the Manager and unitholders more closely, and strengthens incentives to optimise the asset portfolio. Key features include:

- A base fee of 0.55% for the first $1 billion of investment properties and 0.45% thereafter. - A performance fee of 10% of outperformance of the company over other NZX listed property vehicles, with an out-performance cap of 5% above the performance hurdle.

"The proposed changes to the governance and management fee structures represent a significant shift in position and commitment from the Manager's point of view, and we believe they will meet or exceed investor/market expectations. Notwithstanding this, we are committed to genuine consultation with investors in developing the details of the final proposals that will be put to unit holders for approval, to ensure a smooth transition and the best long-term outcomes for ANZO as an investment vehicle," said Mr. Stobo.

The changes mark the beginning of a new era for ANZO.

Chief Executive, Rob Lang, said "I am satisfied that I have achieved all that I set out to achieve and have decided that the new era provides a dynamic opportunity for me to pursue a new direction out side ANZO". Mr Lang said he will remain with ANZO to see through the successful transition to the new governance and fee structures by the end of June this year.

Mr Stobo said "Rob Lang has made a tremendous contribution to ANZO during his tenure. "He has provided high quality leadership to the business and has positioned ANZO strongly as an internationally recognized REIT (real estate investment trust) that is on track to create further value for investors for years to come. The Board recognises this and expresses its gratitude to him.

The Board will conduct an international recruitment process to identify an appropriate successor during the transition period.

Key details about the proposed governance and management arrangements are attached.

ENDS

Media enquiries:

Sue Ryan Communications Manager AMP NZ Office Trust, Office: +64 4 494 2260, Mobile: +64 29 494 2260

ANZO strategic reviews - proposed governance and management details for approval by unit holders by 30 June 2010

Governance and Control - Majority of independent directors (including Chair) with constitutional right for Manager to appoint directors - Strategy and business plan to be determined/approved by Board - Manager delegations of authority under Board direction and control - Disclosure obligations over conflicts or related party transactions

Management Scope - Manager role, responsibilities and performance standards clearly defined - Manager to provide suitable personnel and appropriate standard of service/performance - Clear definition of scope of base services together with additional services otherwise required by ANZO, able to be provided by the Manager at market rates - Performance delivery standards defined

Removal/change of Manager - Annual performance review with dismissal rights for material unremedied underperformance of Manager - On insolvency/liquidation/receivership etc, or material fraud of the Manager - On a change (75%) of control of the Manager

Ability of ANZO Board to terminate under any of the above conditions is subject to ordinary (50%) resolution of ANZO shareholders with Manager shareholders unable to vote ANZO shares on such a resolution

- Manager able to terminate contract on six months notice, providing reasonable transition support - A party acquiring greater than 50% of ANZO's ordinary equity (e.g. takeover) is able to acquire the management contract at (independent) valuation

Fee Structure Timing - implementation subject to unit holder approval backdated to 1 July 2009

Base fee - Tier one: 0.55% for the first $1bn of Investment Properties - Tier two: 0.45% of Investment Properties above $1bn - Tier one threshold indexed annually by CPI - Paid quarterly in arrears

Performance Fee - Calculated quarterly in arrears - Fee = 10% of outperformance * opening share price * weighted average shares - Outperformance = APT total return (including dividends and imputation credits) less NZX Property Index ex APT (including imputation credits) - Opening/closing share price for total return calculation is 5 day vwap - Outperformance cap of 5% above the hurdle/index - Carry - two years only with outperformance above the cap and negative outperformance carried forward - No performance fee paid if total return is negative for the quarter - Payment in cash

Fee review by agreement with ANZO Board End CA:00191774 For:APT Type:GENERAL Time:2010-02-26:09:33:36

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