Symphony pulls out, National moves in on Auckland property trust

By NZPA

Monday 10th June 2002

Australasian property developer Symphony Group has pulled out of talks for a partial purchase of Newmarket Property Trust, paving the way for a takeover by a rival developer.

Symphony had previously served a restricted transfer notice that it intended to buy up to 19.9 percent of Newmarket for between 43c and 51.6c per unit.

The deal involved Symphony giving the trust two Auckland properties in return for Newmarket's management company, which looks after $80 million worth of property.

But the proposal was blind-sided last month when fast-growing National Property Trust (NPT) made a surprise offer for the entire Newmarket trust.

NPT planned to serve notice of a formal offer to Newmarket's board today.

A Symphony director, Chris Minty, said he could not comment on the reasons behind the withdrawal because of confidentiality agreements, but admitted National Property Trust's offer had been "a factor" in its considerations.

"But at the end of the day, having put everything into the pot and had a good look at it, we've decided to withdraw."

Jock Irvine, Newmarket's chairman, said he had been surprised by Symphony's move.

"I suspect they may have been frustrated that the processing of their bid could not be finally determined until we had appropriately considered the second offer."

Mr Irvine said progress had been delayed as the Stock Exchange and the Securities Commission tried to decide which set of regulations covered NPT's bid.

National Property Trust wants to buy Newmarket to tap the lucrative Auckland property market, especially retail property, an area it knows well through owning malls in Christchurch.

"We're coming north because that's where all the action is. Some people would say that the country will recover once Auckland comes right and we're going to be part of that," executive chairman Paul Dallimore said last month.

A formal offer of six units in NPT for every 10 Newmarket units on issue should go out to Newmarket unit holders within the next fortnight.

NPT's offer may prove attractive to Newmarket unit holders -- the Christchurch-based trust's shares are trading around 93c each compared with Newmarket's 50c.

National Property Trust is also larger than Newmarket, with gross assets of $144 million, mainly in Christchurch shopping centres, and a market capitalisation of $51 million.

Newmarket has a $80 million portfolio of gross assets in Auckland and a market capitalisation of $34.5 million.

For Mr Dallimore to succeed, he needs acceptance from more than 50 percent of Newmarket's unit holders, as well as an exemption from the Securities Commission from issuing a prospectus for the units.

Sovereign Assurance, which manages the trust and also holds a 38 percent stake in it, has been reported as saying the National-Newmarket deal made good sense.

Mr Irvine said an independent directors' report on NPT's offer would be out soon.

"The directors of Newmarket have been a bit concerned about the length of time this has taken. I don't think it's anyone's fault, I just think it's part of the system that particularly National have had to go though because it's a public listed entity, and we would like our shareholders put in the picture as soon as possible."

The scramble for Newmarket continues a rash of shakeups in the property sector.

It follows Colonial First State's purchase in February of the management firm of Kiwi Income Property Trust, as well as an unsuccessful bid by Guinness Peat Group directors to have one of its investments, listed Trans Tasman Properties, wound up and proceeds returned to shareholders.

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