ASB's parent company Commonwealth Bank of Australia's set for a $70 million payout after cutting a deal to internalise management of large NZX-listed property trust Kiwi Income Property Trust (KIPT).
The internalisation of the management - involving CBA effectively handing management it currently oversees of KIPT to the company itself - was one of three proposals CBA raised in July.
The other two deals involved management of Commonwealth Property Office Fund and CFS Retail Property Trust Group, both in Australia. There's been no detailed update on the CFS proposal, while CPA has gone into a trading halt in Australia, having earlier been subjected to an unsolicited takeover approach that has been rejected by by CPA.
An announcement by KIPT today said that subject to unit holder approval at a meeting set for December 12, CBA would get a net payment of $70.6 million for the management rights of the New Zealand company.
Chairman Mark Ford said the independent directors, of which he is one, had given unanimous support to the internalisation. "We firmly believe it is in the best interests of unit holders."
He said Internalisation of management was expected to result in pre-tax net expenditure savings of approximately $8 million per annum (after funding costs).
"Based on March 31, 2013 financial information, the net payment equates to a revenue multiple of approximately 2.8x and an earnings before interest and tax (EBIT) multiple of approximately 6.6x. These multiples are in line with New Zealand comparable transactions," he said.
Separately, KIPT today announced a half-year distributable profit after-tax of $33.7 million, up from $30.2 million at the same time a year ago.
The chief executive of KIPT's management company Chris Gudgeon said the highlight for the period was the completion of ASB’s new head office at North Wharf in Auckland.
"This iconic building delivers the trust a net income yield of 8.5% on its $134.0 million development cost and is now valued at $158.5 million."
KIPT has assets of around $2.1 billion, with other significant properties including the Sylvia Park shopping mall in Auckland, Vero Centre in Auckland and Majestic Centre in Wellington.
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