DNZ Update on Argosy Proposal

DNZ Update on Argosy Proposal

DNZ Update on Argosy Proposal 28/06/2011

DNZ Property Fund (DNZ) is providing clarification on the merger exchange ratio in its Argosy merger proposal.

This follows questions raised about DNZ’s previous statement that it has flexibility to ensure that the agreed merger exchange ratio would achieve an accretive outcome for both Argosy unitholders and DNZ shareholders.

Based on the public information available and DNZ’s financial analysis, we believe that a 5-10% premium in the NTA merger exchange ratio could be attributed to Argosy unitholders if the transaction was completed at the same time as exiting the current management contract.

DNZ confirmed that Argosy unitholders would also receive the full benefit from any reduction in the previously announced payment to exit the current management arrangements. However, DNZ would also stress that further information and analysis, including details on Argosy’s forecast earnings and distributions, is required to finalise the assessment of a premium.

DNZ believes this is a one-off opportunity to extract the maximum benefits from combining these businesses and it is critical that Argosy considers this proposal now, rather than defer it and proceed with its proposed internalisation. DNZ continues to believe the merger proposal would not be as attractive to Argosy unitholders if it did not happen as part of an exit of the external management arrangement, as material value benefits to both sets of investors would be lost forever.

DNZ continues to seek constructive engagement with the Independent Directors of Argosy to advance the development of the DNZ merger alternative.

Investors should note that if at any future point the DNZ merger proposal progresses, Argosy unitholders will be provided with a simplified disclosure prospectus. This would be part of the information provided to unitholders prior to seeking approval of any merger proposal.

At this time no DNZ shares are available for subscription by any Argosy unitholders and, for the avoidance of doubt, at this time no money is currently being sought and no applications for DNZ shares will be accepted or money received.

For Further Information Please Contact:
Tim Storey, Chairman, DNZ Property Fund Limited
Mobile: 021 633 089 – Email: tim.storey@dnzproperty.com

DNZ Property Fund Overview
DNZ Property Fund Limited owns one of New Zealand’s largest diversified investment property portfolios with commercial office, retail and industrial properties located in the main urban areas throughout New Zealand.

As at 31 March 2011, DNZ Property Fund owned 50 properties with 283 tenants, a weighted average lease term (WALT) of 4.3 years, an occupancy rate of 98% over a net lettable area of 371,481m², and a portfolio value of $638m.

DNZ Property Fund Limited is a Portfolio Investment Entity in which investors hold shares and is managed by its own internalised management team. DNZ Property Fund Limited also manages the property portfolio of Diversified NZ Property Fund Limited, which is owned by Australian institutional investors.

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