NPT agrees management deal with Augusta
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.