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NPT shareholders greenlight sale of management contract to Augusta

Monday 19th March 2018

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NPT shareholders voted in favour of Augusta Capital buying the real estate investor's management contract for $4.5 million at a special meeting today in Auckland.

Of the votes cast, 97 percent were in favour of the resolution to approve the externalisation proposal. The transaction was conditional on achieving a minimum of 50 percent of votes cast.

"We are pleased that shareholders voted in support of the board’s recommendation to externalise management, which we believe is in the best interests of all shareholders," said chair Bruce Cotterill. 

As a result of shareholder approval being gained, the transaction is now unconditional, NPT said in a release. The management agreement with Augusta will commence on March 26. 

In a separate statement, Augusta said the vote will deliver an approximate 10 percent increase in Augusta’s total assets under management to $1.85 billion, representing total growth in assets under management of approximately $1.56 billion since 2013. 

Prior to the vote, Cotterill said NPT will get a one-off payment of $4.5 million and reiterated the agreement may be terminated any time after five years should the circumstances arise where internal management becomes appropriate.

He said the board considered a number of options including strategic partnerships, property purchases and winding up the company, among others. "Ultimately, the best alternative, under the circumstances, was determined to be the proposal for externalisation of the management of NPT to Augusta," he said. 

Cotterill said the main benefits for NPT include that closely aligned interests mean Augusta will be highly motivated to grow NPT and improve returns, Augusta has substantial resources that NPT will be able to leverage to grow more quickly than it would be able to with its own limited resources, and an immediate saving in the cost of running the company once the management agreement starts.

Augusta Capital managing director Mark Francis said its immediate plan is to address gap between NPT’s current share price and its net tangible assets.

“The immediate focus is two-fold – to address under-performing assets within its portfolio, and pursue acquisition opportunities that are consistent with a broad framework to own quality assets in the right locations that have value-add opportunities," he said

Augusta shares rose 1.9 percent to $1.06 and NPT stock was unchanged at 59 cents, 

(BusinessDesk)

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