Announces Full Year Property Portfolio Valuation

Kiwi Income Property Trust

Announces Full Year Property Portfolio Valuation

Kiwi Income Property Trust today announced a 4.0% reduction (approximately $82 million) in the value of its portfolio of prime office and retail assets for the financial year ended 31 March 2011. The valuations were determined by independent valuers, are subject to final audit, and will be confirmed in the Trust’s financial result for the year to 31 March 2011.

Sean Wareing, Chairman of the Manager of the Trust, said: “The reduction in portfolio value over the past year is largely attributable to the impact of the February 2011 earthquake on our two Christchurch assets. Our independent valuations reflect the uncertainty in Christchurch created by the earthquake with a $52.1 million, or 17.9% reduction in the combined value of Northlands Shopping Centre and the PricewaterhouseCoopers Centre. The Trust benefits from the size and geographic diversity of its property portfolio, an attribute which is particularly helpful in times such as these. It is also important to note that underlying operating earnings remain sound and this movement in portfolio value will not adversely affect distributions to Unit Holders.”

As at 31 March 2011 net bank debt represents approximately 33% of total assets. The overall value of the Trust’s property portfolio, as at 31 March 2011, is approximately $1.98 billion and the Trust’s undiluted net tangible asset backing per unit is approximately $1.07.

Chris Gudgeon, Chief Executive of the Manager of the Trust, said: “We are pleased to see that our retail portfolio, excluding Northlands Shopping Centre in Christchurch, increased in value by $6.3 million (0.6%). This was driven by the Trust’s flagship retail asset, Sylvia Park Shopping Centre in Auckland.”

Since 31 March 2010, Sylvia Park’s value has increased $23.0 million (5.1%) to $474.0 million and the capitalisation rate has firmed 13 bps, from 6.88% to 6.75%, reflecting the centre’s continued strong trading performance and future growth prospects.

“If the Christchurch assets are excluded, the capitalisation rate for the overall portfolio has improved since 31 March 2010, with the weighted average capitalisation rate firming from 7.88% to 7.83% (on a like-for-like basis). This reflects the stabilising trend in asset values,” Mr Gudgeon said.

Independent valuations prepared by Colliers International (Colliers) for the Trust’s Christchurch assets, Northlands Shopping Centre and the PricewaterhouseCoopers Centre, have taken into account the effect of the 22 February 2011 earthquake on that market. The valuations are based on the valuer’s current assessment and could be subject to adjustment prior to finalisation of the 31 March 2011 financial statements. In determining the valuations, Colliers has taken into account the benefit of the Trust’s material damage and business interruption (including loss of rents) insurance cover.

The value of Northlands Shopping Centre has been reduced by $31.3 million (13.1%) to $207.0 million. Trading activities were interrupted only briefly as a result of the earthquake, with 95% of retailers open for business within two weeks. The centre is now experiencing higher patronage due to earthquake damage to competing retail centres. However, with medium to longer-term uncertainty around the city’s recovery, future spending patterns and rental growth, the capitalisation rate has been softened by 100 bps to 8.50%.

The value of the PricewaterhouseCoopers Centre, located within the Christchurch CBD, has reduced by $20.8 million (39.4%) to $32.0 million. This reflects Colliers’ current assumptions (which are necessarily uncertain) in relation to the restoration of access and services to the CBD, the programme and extent of remediation works, the status of current leases and future tenant demand. Access to the property has been restricted, due to its location within the central city cordon and, as a result, it has not been possible to complete a full structural assessment. Importantly for the Trust the building, which represents only 1.6% of the overall portfolio value, is fully insured for material damage and consequential loss, including three years loss of rent insurance.

Excluding the PricewaterhouseCoopers Centre, the Trust’s office portfolio decreased in value by $32.2 million (5.0%), reflecting the increase in vacancy rates in Auckland and Wellington and the softening in market rents over the past three years.

The Trust’s overall portfolio value includes LynnMall Shopping Centre in Auckland, acquired on 31 December 2010, for $174.0 million. As at 31 March 2011 the centre was valued at $175.0 million at a core capitalisation rate of 8.00%.

Mr Gudgeon said: “The acquisition of LynnMall Shopping Centre has favourably increased the Trust’s weighting to the retail sector in Auckland.”

ENDS

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