Friday 9th February 2018
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Augusta Capital has bought the management contract for real estate investor NPT for $4.5 million, subject to shareholders signing off on the deal at a special meeting next month.
Under the deal, Augusta expects to immediately lift management fee income by $900,000 for its base fee of 0.5 percent of assets under management up to $500 million, 0.4 percent on assets above that level, plus other fees, it said in a statement. Augusta, which owns 19 percent of NPT, had to raise its offer after being initially rebuffed last year and winning over shareholders to reject a rival proposal from Kiwi Property Group.
"Augusta has proposed and JNPT has accepted a yield plus growth investment strategy for NPT which Augusta believes will strongly differentiate NPT from other investment options in the listed property sector and suits the current low-yield environment," managing director Mark Francis and chief operating officer Guy French-Wright said. "The strategy would see Augusta tasked with repositioning the existing portfolio of assets as well as identifying assets for acquisition which it believes have strong yield and growth opportunities."
NPT said KordaMentha concluded the deal was fair to all shareholders in an appraisal report, and that the board was satisfied the proposal is in the interests of all shareholders. NPT expects to benefit from lower corporate costs and access to Augusta's resources, saying they're "well beyond what NPT could reasonably afford itself on its current size and market position".
Chair Bruce Cotterill said the board worked through a robust process to evaluate the deal and negotiate the terms, and will provide greater details underpinning its recommendation in the notice of meeting.
If approved, the deal will be for at least five years, after which NPT can exercise a right to end it with shareholder approval.
Augusta won't vote on the transaction because it's a related party.
In April last year, NPT shareholders voted on competing proposals for the management by Augusta and Kiwi Property Group, with Augusta ultimately winning out.
Augusta had planned to pay $3.5 million for the contract and facilitate several deals to expand NPT's assets under management, whereas Kiwi Property offered $6 million for the contract and would have poured two of its own properties into NPT for cash and shares and subscribed to new stock at a discount.
Augusta shares fell 1.9 percent to $1.04 and NPT stock was down 1.7 percent to 59 cents, tracking a broader market decline with the S&P/NZX All Index down 1.7 percent.
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