Archive | NPT

NPT scores miserable result, adopts Augusta strategy of repositioning assets

NPT Ltd, which has struggled to gain either critical mass or momentum since its inception as a listed trust in 1994, reported a miserable annual result yesterday, as shareholders’ funds again declined.

The answer is to adopt the more aggressive style of its new manager & 18.85% shareholder, Augusta Capital Ltd: buy properties to reposition, redevelop & lease – and sell rather than remain a passive investor.

Once its $47 million sale of the AA Centre to SkyCity Entertainment Group Ltd settles in July, NPT will be down to a portfolio of just 3 properties worth a combined $124.6 million – the Eastgate shopping centre in Christchurch, 22 Stoddard Rd retail centre in Mt Roskill, Auckland, and Heinz Wattie’s national distribution centre in Hastings. The company sold Print Place in Christchurch in March for $8.25 million – 25% less than its $11 million carrying value.

Augusta also started life as a small portfolio owner and was destined to stay that way unless it changed its strategy. It’s sold down all but the remaining 2 parts of the Finance Centre in Auckland (scheduled to settle on 1 April 2019), and now manages $1.85 billion of assets held by syndicates & NPT.

Without the $4.5 million sale of its management rights to Augusta, right on balance date, NPT would have struggled to make a profit. Including those management rights, its net profit after tax was $3.095 million – $22,000 more than in 2017.

NPT chair Bruce Cotterill said in the company’s annual results announcement yesterday revaluations had reduced net tangible assets by $2.95 million ($1.65 million last year). In both 2017 & 2018, NPT paid out about $5.8 million in dividends. Shareholders’ funds have dropped by $5.5 million in 2 years, and just under $20 million in the last 3 years, to $114.3 million.

Mr Cotterill, appointed independent chair in April 2017 when Augusta staved off Kiwi Property Group Ltd’s bid for control, said operating earnings for the 12 months to March 2018 were consistent with the previous year, but revaluations & the $2.97 million loss on disposal of assets had reduced net tangible assets by 2.3%.

“We are confident that the position of the existing portfolio is now sustainable & positioned for value add-related growth moving forward.

“With Augusta, the board have now identified a defined value-add strategy in which the company will seek to acquire properties with the potential to reposition, redevelop & lease; all with the aim of creating future value. The future strategy differentiates NPT from the sector and provides a framework for relative outperformance,” he said.

Other points from the annual result:

  • Net operating income after tax, down 1.4% to $5.8 million ($5.88 million)
  • Adjusted funds from operations up 4.1% to $6.15 million ($5.9 million)
  • Gearing (loan:value ratio) 26.6% (33.1%)
  • Net tangible assets/share 70.6c (72.3c)
  • Basic & diluted earnings/share up 1c to $1.91
  • Portfolio occupancy 97.4% (96%) due to higher occupancy at Stoddard Rd and the sale of Print Place
  • Weighted average lease term 4.4 years (4.6 years)
  • An unchanged final quarter dividend of 0.9c/share has been declared; total dividends paid for the year are also unchanged at 3.6c/share; payout ratio is 95% based on adjusted funds from operations of $6.15 million

Earlier stories:
27 March 2018: Augusta settles NPT management rights payment
21 March 2018: Francis talks about a livelier future for NPT
20 December 2017: NPT accepts 25% cut to sell Christchurch property
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
28 August 2017: Cotterill sees opportunity for NPT as tenants quit

Attribution: Company release, presentation, annual report.

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Augusta settles NPT management rights payment

Augusta Capital Ltd settled its acquisition of NPT Ltd’s management rights at the close of business on Monday and has taken over from internal management.

The vote by NPT shareholders a week earlier (excluding Augusta, which holds 18.85%) to switch to external management by Augusta was 96.71% in favour.

The price for the management contract was set at $4.5 million, based on 3.8 times the fees that would be paid to Augusta as manager. The contract can be ended after 5 years.

NPT chair Bruce Cotterill said Tony Osborne ceased to be NPT’s chief executive immediately, and that Augusta managing director Mark Francis, chief operating officer Guy French-Wright & chief financial officer Simon Woollams were considered to be senior managers of NPT.

NPT’s registered office will move to Augusta’s office at 30 Gaunt St (above Bayleys in the Wynyard Quarter) from Thursday 5 April.

Earlier story:
21 March 2018: Francis talks about a livelier future for NPT

Attribution: Company release.

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Francis talks about a livelier future for NPT

The vote by NPT shareholders to switch to external management by Augusta Capital Ltd was clear on Monday: 96.71% in favour.

Augusta, NPT’s largest shareholder, couldn’t vote its 18.85% stake because it was a related party. But the support of other shareholders means Augusta’s $1.7 billion of assets under management have grown by just under 10%, to $1.85 billion.

Investors in NPT shares (and the units before that) have had a lot of “what next?” moments, but it remained a small & stumbling NZX-listed property investor. As Augusta managing director Mark Francis told the special meeting to approve externalising management, Augusta has a clear interest in growing the asset base & improving performance, but taking over NPT wasn’t an option for it.

After selling its Print Place industrial property in Christchurch for $8.25 million (compared to the book value of $11 million) in December, and the AA Centre on the corner of Albert & Victoria Sts in central Auckland to SkyCity Entertainment Group Ltd last October for $47 million (settlement scheduled for July), NPT will have a $128 million portfolio of 3 properties and 2 cheques that will reduce its liabilities to about $10 million.

Investors in NPT can expect its assets to be massaged & turned over, a considerable advance from hold & hope. That’s the strategy Augusta has adopted for the syndicates it manages – previously single-asset holds, in some cases switched into a multi-asset fund, in other cases revamped & re-leased.

The Augusta model

Mr Francis told the NPT shareholders: “We’ve identified opportunities for multiple-asset funds which can be listed. The industrial fund will launch (after Easter) with about $115 million of assets, but we intend to double that.”

It will be followed by a tourism fund, based on assets under scrutiny in Queenstown & Auckland.

“Residential is another space we’ve identified. We’re seeing a lot of traction in Australia & the US. Residential is now the second biggest asset class in America.”

As for the commercial & industrial funds in New Zealand, Mr Francis said: “What most of the funds are about is yield. We felt we had underperforming assets which could be repositioned.”

Augusta’s Value Add Fund No 1 was designed with a different mandate from standard syndicates, owning a portfolio of assets, 4 now sold, the 5th under negotiation and the 6th providing returns within Augusta’s target range of an 11-14% internal rate of return.

“It is a space Augusta has a lot of strength in. The way the market has been over the last few years, yields compressing, it’s been harder & harder to find assets, hence the value-add space.”

Mr Francis said the NPT deal plus “a few things we have in the pipeline” would see Augusta’s funds under management approaching $2 billion.

Objectives

For both Augusta & NPT, he set these objectives: “We’re looking to assets that are unloved but can perform. At NPT, our over-arching objective is to close the NTA gap.

“It’s scale, not at any cost but on the right terms, and to benefit ourselves.”

He said NPT needed “a reimagined name/brand to support the growth strategy and eradicate legacy issues relating to poor performance: We’re all about the future. That’s how we see our strength and believe we can add a lot of value.”

At the shareholder meeting, the question of the NPT board’s decision to sell Print Place well under previous annual valuations was one for chair Bruce Cotterill, who said that even before Christchurch’s earthquakes it had proved hard to lease.

“We made the decision, in December we would have been down to one tenant. It’s in the wrong place, it’s got a lot more office space than industrial needs. We worked extensively on a leasing programme and it came to nothing.”

Mr Cotterill said NPT got 3 offers for Print Place, all within $250,000 of each other: “We picked the second best, which we thought had the best chance of getting there, and it became the best offer (after a slight raise).”

One shareholder raised a question about the Augusta proposal compared to what shareholders might have got had they accepted Kiwi Property Group Ltd’s management proposal last year, but both Mr Cotterill said the Kiwi offer wasn’t on the table now, while director Carol Campbell said you couldn’t go back to consider an offer shareholders had rejected.

Mr Cotterill, appointed independent chair in April 2017 when Augusta staved off Kiwi’s bid for control, told shareholders: “This board over the last year has looked at a lot of major options, including acquisition of a portfolio, (but) it’s very hard to reposition a company at the top of the cycle. The view we formed is that we need the arms & legs that a management company can provide.”

Augusta will pay $4.5 million for the management contract, which can be ended after 5 years. Mr Cotterill said the price was based on 3.8 times the fees that would be paid to Augusta as manager.

He said the next step for NPT would be “to sit down with Guy (Guy French-Wright, Augusta chief operating officer) & his team, look at what the opportunities are that they think we should be investing in. That will be the focus over the next 2-3 months.

“If it’s not supported, we’ll have to come up with our own plan forward.”

Earlier stories:
2 March 2018: NPT sets meeting date on externalising management
9 February 2018: Augusta & NPT reach agreement on management, shareholder vote to seal it
20 December 2017: NPT accepts 25% cut to sell Christchurch property
6 December 2017: Augusta fund sells NZ Post building
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
4 September 2017: Augusta shareholders get insight into workings of a fast-moving asset manager in an oft-pedestrian sector
28 August 2017: Cotterill sees opportunity for NPT as tenants quit
21 April 2017: 
Augusta wins fight for NPT
27 September 2016: 
Augusta buys 9% of NPT

Attribution: NPT meeting, releases.

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NPT sets meeting date on externalising management

NPT Ltd has called a meeting for Monday 19 March for shareholders to vote on a proposal to externalise management to Augusta Capital Ltd subsidiary Augusta Funds Management Ltd. The NPT board unanimously supports the proposal.

Augusta said that if NPT shareholders approve the transactions, it would settle acquisition of the management rights on 26 March and assume responsibility for the management of NPT from that date.

NPT Ltd, special meeting on externalising management to Augusta Funds Management Ltd, Monday 19 March at 2pm, Link Market Services Ltd, Deloitte Centre, 80 Queen St

Link: NPT notice of meeting

Earlier story:
9 February 2018: Augusta & NPT reach agreement on management, shareholder vote to seal it

Attribution: Company releases.

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Augusta & NPT reach agreement on management, shareholder vote to seal it

Augusta Capital Ltd said today it had entered into a binding agreement with NPT Ltd to acquire the rights to manage NPT on an exclusive basis.

It’s conditional on the approval of NPT shareholders at a meeting expected to be held in the second half of March. Augusta, which holds 18.85% of NPT, won’t be voting because it’s classified as a related party.

Mark Francis.

Augusta managing director Mark Francis said: “There has been no change to the key terms previously notified when the non-binding agreement was entered into. These include:

  • Augusta will pay $4.5 million to NPT to acquire the management
  • The management fees to be paid to Augusta under the management agreement include a base management fee of 0.5%/year on up to $500 million of assets under management and 0.4% on assets under management over $500 million, and
  • Property management, performance, leasing, acquisition & development management fees are also payable.

“Augusta expects the management agreement will initially increase Augusta’s recurring base management fee income by about $900,000 based on NPT’s current balance sheet. Augusta considers the remainder of the terms of the management agreement are best-in-class compared to similar management agreements. Importantly, Augusta’s interests are firmly aligned with NPT shareholders’ through its 18.85% shareholding.”

Mr Francis said Augusta had proposed – and NPT had accepted – a “yield plus growth” investment strategy for NPT, which Augusta believed would strongly differentiate NPT from other investment options in the listed property sector and suited the current low-yield environment.

“Augusta has a track record of identifying & adding value to assets. 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 & growth opportunities.”

Cotterill adds an out

Bruce Cotterill.

NPT chair Bruce Cotterill said: “Substantial progress has been made since it was announced last year that an agreement in principle had been reached. Since then, the NPT board has worked through a robust process to evaluate the proposal and negotiate the detailed terms. The board is satisfied that the proposal is in the best interests of all NPT shareholders in the context of its current market position & preferred strategy.”

The independent directors of NPT commissioned KordaMentha to prepare an appraisal report, which concluded that the transaction was fair to all 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.”

Mr Cotterill added one key term of the agreement that Mr Francis didn’t highlight: The management agreement may be discontinued after a minimum period of 5 years, under certain circumstances. Discontinuance would require shareholder approval & the payment of a fee calculated by an agreed formula, outlined in the management agreement.

Mr Cotterill added that the NPT board believed the key benefits to NPT of proceeding with the externalisation of management included:

  • immediate cost savings in corporate overheads
  • access to Augusta’s substantial resources & expertise across all of the key areas of property management – well beyond what NPT could reasonably afford itself based on its current size & market position
  • benefits associated with Augusta’s market breadth & depth, which is likely to result in access to more investment opportunities more quickly and therefore more rapid progress against the strategy & goals of the NPT board, and
  • demonstrated success in creating & applying growth strategies and a vested interest in the success of NPT as its current largest shareholder.

Attribution: Company releases.

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NPT accepts 25% cut to sell Christchurch property

NZX-listed property investor NPT Ltd said yesterday it had accepted an offer from a private investor to buy its Print Place, Christchurch, industrial property for 25% less than its carrying value.

Chair Bruce Cotterill said the NPT board had agreed this property no longer fitted with its preferred strategy and therefore should be sold.

Although the company had achieved higher than average yields on it, “this location & type of commercial property is no longer in strong demand. The property is now experiencing tenancy vacancies and requires substantial capital investment.”

NPT got 3 offers through a tender campaign, and Mr Cotterill said an $8.25 million offer from a South Island investor was deemed most attractive based on a number of factors, including having the fewest conditions attached.

“Although the offer is below the current carrying value of $11 million, it is the view of the NPT board that the sale price achieved allows the company to arrest ongoing losses and to reinvest capital into opportunities which offer better long-term value growth.”

Attribution: Company release.

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Augusta & NPT reach broad agreement on portfolio management

Augusta Capital Ltd has entered into a non-binding agreement with NPT Ltd to manage NPT’s property portfolio.

The non-binding portfolio management agreement, announced yesterday, is subject to due diligence by both parties, negotiation of the terms of the management agreement and the approval of NPT shareholders.

The portfolio is a thin one. NPT has agreed to sell to SkyCity Entertainment Group Ltd its interest in the AA Centre, which runs from Albert St to SkyCity’s front door on Federal St in downtown Auckland. Settlement is scheduled for next July.

The listed property investor has 4 other assets – the Heinz Wattie national distribution centre in Hastings, the Eastgate mall & Print Place in Christchurch, and the 22 Stoddard Rd shopping centre in Mt Roskill, Auckland.

NPT shareholders voted in April to hand the company’s management contract to Augusta, defeating a proposal for Kiwi Property Group Ltd to take over. Augusta lifted its NPT stake to 18.85% before the meeting, and won the vote with the support of associates.

This time round, Augusta won’t be allowed to vote because it’s a related party. Approval will be by an ordinary resolution, requiring over 50% support.

Under the proposal, Augusta will pay NPT $4.5 million to buy the management rights.

Bruce Cotterill.

NPT chair Bruce Cotterill said other key terms included:

  • The agreement will be for no less than 5 years (unless terminated by either party for cause) and thereafter will continue until NPT exercises its right to discontinue, which would require a resolution of shareholders, and
  • The fees charged under the management agreement will be in line with sector benchmarks.

Mr Cotterill commented: “Importantly, the NPT board considers that the proposed investment strategy outlined by Augusta is closely aligned with its views on the preferred way forward for NPT.

“We anticipate the process to move from agreement in principle to finalised documents that can be put before shareholders for consideration could take about 6-10 weeks, although the Christmas period may interrupt that process.”

Francis says agreement “best in class”

Mark Francis.

Augusta managing director Mark Francis said Augusta “considers that the remaining key terms, including management fees & termination rights, are best in class compared to other external management agreements in the New Zealand listed property sector”.

He said the 2 companies would work towards agreeing the full terms of the management agreement so NPT can call the shareholder meeting as quickly as possible.

Mr Francis believed externalising management would be accretive to NPT’s earnings: “Augusta has proposed 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.

“Augusta has a track record of identifying & adding value to assets. 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 & growth opportunities.

“If approved, the externalisation would increase Augusta’s recurring management fee income by about $900,000/year, based on NPT’s current balance sheet. Further details will be available once a binding agreement is entered into and a notice of meeting issued by NPT to its shareholders.”

Links: NPT
Augusta Capital

Earlier stories:
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
28 August 2017: Cotterill sees opportunity for NPT as tenants quit
21 April 2017: Augusta wins fight for NPT
27 September 2016: Augusta buys 9% of NPT

Attribution: NPT & Augusta releases.

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SkyCity buys AA Centre to consolidate precinct control

SkyCity Entertainment Group Ltd has bought NPT Ltd’s interest in the AA Centre at 99 Albert St in central Auckland for $47 million.

SkyCity said the acquisition was consistent with its intention to consolidate control over its Auckland precinct as part of the Auckland masterplanning it’s undertaken: “The masterplan, once completed, will incorporate opportunities for further hotels, apartments, food & beverage outlets, entertainment facilities & office spaces, with the aim of having a cohesive & integrated mixed-use entertainment precinct, and will ensure that SkyCity leverages the benefits of the increased pedestrian traffic flows anticipated following completion of the city rail link.”

Image above: The AA Centre is across the Victoria St West intersection from an entrance for the city rail link Aotea Station, one full block up from Queen St and one block from the SkyCity casino & tower (at right).

The rear entrance to the SkyCity Grand Hotel & original convention centre is from Albert St, a few doors along from the AA Centre.

The 2 NZX-listed companies entered a conditional agreement on 31 August and it went unconditional last Thursday, 12 October. Settlement is scheduled for 12 July 2018.

Under the agreement, NPT must complete $2 million of capital improvements, which it began before the agreement was signed.

Bruce Cotterill.

NPT chair Bruce Cotterill said that, after allowing for those capital improvements, the transaction would increase NPT shareholder equity by $2 million over the $40.85 million valuation at 31 March.

The yield was about 7% on rent which wasn’t stated in NPT’s annual report or in this announcement. Occupancy of NPT’s share of the building at 31 March was 91.6%.

NPT owns 15 levels (12,000m²) of the 17 office floors, ground-floor retail, the through-site link to Federal St & 90 parking spaces.

The NZ Automobile Association owns the other 2 office levels, some ground-floor retail and a few parking spaces.

Mr Cotterill said: “The sale of this property represents a first step on the path to repositioning NPT. We have achieved a very good price, as compared with current book value, and the 9-month settlement period allows us to maintain current profit & distribution forecasts through to 31 March 2018 while we progress the board’s broader plans for NPT.

“The board is intending to update shareholders on its proposed strategy for the future of NPT in the coming weeks. The sale proceeds will be used to invest in the purchase of assets where we can see an opportunity to add value.”

SkyCity expected the acquisition to be “marginally earnings accretive” from its 2019 financial year. The company will fund the acquisition from existing bank facilities.

Attribution: NPT & SkyCity releases, NPT annual report.

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Cotterill sees opportunity for NPT as tenants quit

Image above: The AA Centre on the corner of Albert & Victoria Sts in downtown Auckland, between the bungy jumps of the Royal International site & Sky Tower, and with works underway at the corner for the city rail link tunnel & station.

Listed property investor NPT Ltd has tenants leaving 2 of its 5 properties – one of them quitting 6 office floors – and the new board sees opportunity.

Bruce Cotterill.

New chair Bruce Cotterill was dying to tell shareholders about impending investment activity at the annual meeting in Auckland on Friday, but didn’t quite have everything in place to make the revelations.

“While we aren’t in a position to provide any detail at this time, we are working on a number of initiatives that we expect will deliver better returns to our shareholders and would set us on a clear path to growth. Although it is early days in our tenure as directors, this board has made rapid progress and shareholders may expect an update in the coming weeks as some of our initiatives come to fruition,” he said.

NPT has had a chequered history since its inception as the National Property Trust in 1994, but one thing about it hasn’t changed: it started small and has remained so, getting its portfolio over $200 million in value for a while but now down at $174 million.

Its change in prospects began last September when Augusta Capital Ltd bought 9.26% of its shares from the Accident Compensation Corp, then proceeded to make an offer for its management contract. In October, Augusta said it also wanted NPT to buy a portfolio of 3 unidentified properties valued at $329 million, and it wanted to help NPT grow its portfolio to improve returns.

This latter was odd, because Augusta had whittled down its own portfolio in favour of managing syndicates. NPT’s board baulked, and so began a struggle for control that cost NPT $2 million.

The loser, at a special shareholder meeting in April, was Kiwi Property Group Ltd, which also wanted NPT to buy properties – 2 assets valued at $230 million, the Majestic Centre in Wellington & North City Centre at Porirua, now on the market through an expressions of interest process.

Augusta won the fight for control after lifting its holding to 18.85% and the total  vote against Kiwi’s proposal was 54.85%.

Mr Cotterill was installed as independent chair; a recently appointed member of the old board, Carol Campbell, remained as an independent (and had her position confirmed at Friday’s meeting); and Augusta’s new chair, Paul Duffy, and another independent, Allen Bollard, were elected.

AA moving to Sale St

Mr Cotterill told shareholders AA Insurance had recently informed the company it intended to relocate to a new office building under construction by Mansons on Sale St in February 2018, although its lease on its 6 floors in the AA Centre – right above the Aotea station being constructed beneath its Albert-Victoria St windows – runs until June 2019.

Said Mr Cotterill: “This departure will provide us with a further opportunity for refurbishment & repositioning of the building in the Auckland City office leasing market. Leasing inquiry for the floors that are to become vacant is very strong and we expect to be able to lease them relatively quickly.”

He said NPT had been working on leasing the AA space for a couple of months: “We don’t have signatures on paper but we do have good inquiry.”

Print Place – repositioning or disposal?

In Christchurch, NPT’s property at 17 Print Place, Middleton, recently lost one of its 3 tenants and will lose another in December. On this, Mr Cotterill told shareholders the vacancy & shortening weighted average lease term had resulted in the value of the property easing. But again Mr Cotterill saw opportunity: “This vacancy may provide us with an opportunity to reposition the property.”

Mr Duffy said it was over-rented and had too much office space relative to its warehousing.

One shareholder questioned the board about NPT being an absentee landlord, but Mr Cotterill responded: “We agree with you, and we’ve appointed Colliers [as manager of its Christchurch properties]. They haven’t got any tenants yet because we only agreed to appoint them this morning.”

Mr Cotterill agreed with another shareholder that selling Print Place was also an option. He said the new board had 2 strategies to focus on – growing the portfolio, and repositioning what it already owned.

He cautioned that growth wouldn’t be easy: “We’re trying to rebuild when prices are at their peak. That’s not the easiest thing to do.”

He said the board recognised that “mum & dad” shareholders relied heavily on dividends and the board intended to maintain dividends at their present level. On Friday afternoon the board announced a 0.9c/share first-quarter cash dividend, carrying 0.1544c/share of imputation credits, and gave full-year guidance that total dividends would be at least the same as last year, 3.6c/share.

Again, Mr Cotterill presented the optimistic outlook: “This represents a conservative approach to 2018 financial year distributable profit while the board considers a number of options before it for NPT’s future direction. A further update can be expected on the board’s plans for NPT in the coming weeks.”

At the moment, NPT’s management remains internal – Kiwi’s proposal to buy it was defeated in April and Augusta’s proposal wasn’t put to that meeting, but Mr Cotterill said the outcome of the April meeting had raised interest in taking over the contract. One party had turned its talks into a proposal and the board was discussing the possibility with another: “There’s nothing concrete,” he said.

Earlier stories:
2 June 2017: NPT profit eaten up in battle over its future
26 April 2017: Cotterill takes chair at NPT
21 April 2017: Augusta wins fight for NPT
7 April 2017: Augusta lifts stake in fight for NPT
31 March 2017: An unlikely twist could still derail NPT’s Kiwi deal
31 October 2016: Fourth era for NPT a hard option to combat
27 September 2016: Augusta buys 9% of NPT

Attribution: Annual meeting.

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NPT profit eaten up in battle over its future

Small listed commercial property owner NPT Ltd increased its gross rental income by 1% in the year to March, but saw its net after-tax profit plunge by 63% through costs associated with the battle for its future.

Control of the company shifted post-balance date to listed funds management specialist Augusta Capital Ltd.

At a special meeting in April, NPT shareholders voted to hand the company’s management contract to Augusta, defeating a proposal for Kiwi Property Group Ltd to take over.

Augusta lifted its NPT stake to 18.85% before the meeting, and won the vote with the support of associates.

Former Ngai Tau Property Ltd director Tony Sewell had taken over the chair at NPT from Sir John Anderson in March, but was ousted in April and the new chair is Bruce Cotterill. Augusta chair Paul Duffy and former Tramco Group Ltd chief executive Allen Bollard also joined the NPT board, Jim Sherwin was voted out and the one director to stay on is Carol Campbell.

Mr Cotterill said on Wednesday the new board was undertaking a thorough analysis of the 2018 financial year’s business plan before confirming guidance on the cash dividend for the year, and was also working on a plan to take NPT forward. He expected to release an update before the annual meeting in August.

Mr Cotterill said NPT’s results for the financial year just ended were negatively impacted by the costs associated with the Kiwi Property proposal that didn’t proceed and assessing other proposals, primarily for legal fees, due diligence, financial analysis and holding the April special meeting. The total cost incurred in the 2017 financial year was $1.339 million and a further $348,000 has been incurred in the 2018 financial year.

“There are still a number of challenges ahead of us that are mostly a consequence of a lack of scale. The board is committed to improving returns to shareholders and is focused on advancing the necessary steps in support of this goal as quickly as practical. Once a plan for NPT’s future is sufficiently developed, the board looks forward to engaging with shareholders to seek their views before moving forward with any significant course of action.”

Key financial performance points (2016 figures in brackets):

  • Gross rental income up 1% to $17.15 million ($16.98 million)
  • Net profit after tax down 63.1% to $3.1 million ($8.4 million)
  • Distributable profit before tax down 1.4% to $7.2 million ($7.3 million)
  • Distributable profit after tax down 0.2% to $6.1 million ($6.1 million) or 3.78c/share (3.79c/share)
  • Loan:value ratio 33.2% (28.2%)
  • Net tangible asset backing 72c (74c)
  • Cash dividend maintained at 3.6c/share for the full year, 0.9c/share for fourth quarter

Property portfolio update

NPT undertook several substantial capital investment projects during the year, and chief executive Tony Osborne said some of that contributed to an increase in rental revenue, particularly at Eastgate & 22 Stoddard Rd: “Further gains will be realised as vacant space at Eastgate & the AA Centre is leased.”

Highlights:

  • Net rental income up 2.6%
  • Increased valuations at Eastgate, 22 Stoddard Rd & AA Centre, offset by reduction in valuations at Print Place & Heinz Watties; overall loss of $1.7 million after taking capital expenditure into account
  • Occupancy at 96.0% (97.1%)
  • Weighted average lease term 4.6 years (5.4 years)
  • 22 Stoddard Rd back to 100% occupancy
  • Refurbishment of AA Centre level 8 nearing completion.

Attribution: Company release.

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