NPT agrees management deal with Augusta

NPT chairman Bruce Cotterill says a report showed the deal was fair for shareholders.
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NZX-listed property company NPT has agreed to sell a contract for its management to 18.9% shareholder Augusta Capital.

Under the deal, subject to shareholder approval, Augusta will pay $4.5 million for the contract, $1 million more than it offered in a similar proposal in 2016.

NPT will pay a base management fee to Augusta of 0.5% on assets up to $500 million, plus extra fees for property management, performance, leasing, acquisition and development management.

Augusta said the deal would initially increase its base management fee income by $900,000.

NPT said the deal would lower its corporate overhead costs and provide access to resources and expertise it could not otherwise afford.

NPT chairman Bruce Cotterill said an independent report by KPMG had concluded the deal was fair to shareholders.

“The NPT board therefore intends to recommend that shareholders vote in favour of the resolution to proceed with the externalisation of management. Further detail regarding the basis for this recommendation will be set out in the notice of meeting. This will be sent to shareholders ahead of the special meeting,” Mr Cotterill said.

The meeting is expected to be held in March.

As a related party, August Capital will not be entitled to vote on the transaction.

NPT said the deal included a right to discontinue the management agreement after five years “under certain circumstances” including a requirement for shareholder approval and the payment of a fee calculated by an agreed formula.

NPT shares last traded at 60c, valuing the company at $97 million.

The company owns a small portfolio of retail and industrial property including Eastgate Shopping Centre in Christchurch and a Heinz Wattie distribution centre in Hawkes Bay.

Augusta Capital shares last traded at $1.06, valuing the company at $92.8 million.

Augusta also owns a property portfolio in Auckland but its focus is as a property manager.

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4 Comments & Questions

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At current rates of sell-off there's not a lot left to manage anyway. For years the current and former management have told shareholders that these sell-offs were because the properties didn't fit in with the portfolio, and new properties would be bought that did. Well so far any new purchases have yet to happen despite assurances that they will. I'm only skeptical because in my experience with this company over many years, not one single thing that I've ever been told has ever happened. Time will tell I guess.

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Check out all the different fees payable...what's the bet that npt starts buying high yield low grade properties in a hurry attracting lots of acquisition fees.very glad to be out.

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The property syndicates are the biggest rort going, and only guarantee fees for the administration.

Most, if not all, that set these up and manage them have only interest for themselves.

Its time the government regulated these cowboys, and a simple way would require promoters to maintain a minimum interest of 25% in the investment they are promoting. Its time they assumed some of the risk, rather than guaranteeing themselves fees and a golden parachute on the way out.

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Richard - read the article, Augusta have a 18.9% in the game i'd say!

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