Special shareholder meeting – presentation and addresses

Special Shareholder Meeting
3 June 2022
Asset Plus Limited

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Virtual meeting information
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1.Registering to vote:
•Click on the ‘Get a voting card’
box at the top of the webpage
or below the virtual
presentation and webcast.
2. Asking questions:
•Only shareholders are eligible
to ask questions.
You will only be able to ask a
question after you have registered
to vote. If you would like to ask a
question, click on the ‘Ask a
Question’ box either at the top or
bottom of the webpage.

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Placeholder – voting virtually
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1.Click the “Get a Voting
Card” button at either
the top or bottom of
the page
2.Enter your CSN/Holder
Number or Proxy
Number and click
“Submit Details and
Vote”
3.Fill out your voting card
for each item of
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4.Click “Submit Vote” or
“Submit Partial Vote.”*

1.Chairman’s Introduction & Address
2.Manager's presentation on the proposed sale of 35 Graham Street, Auckland
3.Shareholder Questions
4.Resolution
Agenda

Chairman’s Introduction & Address

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•Shareholders are given the opportunity to vote on the
proposed sale of
35 Graham Street, Auckland
•Currently owned by Asset Plus Investments Limited, a wholly
owned subsidiary of Asset Plus
•An offer to buy the property for $65.0 million has been made
by Mansons TCLM Limited
•It is the Board’s unanimous recommendation that shareholders
vote in favourof accepting this offer
Chairman’s Introduction & Address
Assetplusnz.co.nz

Manager’s presentation

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Transaction details
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The property
35 Graham Street, Auckland
Vendor
Asset Plus Investments Limited
Purchaser
MansonsTCLM Limited
Price
$65.0 million (plus GST, if any), increasing to $68.0 million if the purchaser elects to extend
thesettlement date to 1 December 2024.
Settlement date
1 December 2023, subject to the purchaser having the right to defer settlement for 12 months
until 1 December 2024, by giving the vendor notice prior to 1 October 2023.
Deposit
$6.5 million (10%) deposit, increasing to $13.6 million if the purchaser exercises its right to
extend the settlement date to 1 December 2024. The deposit is refundable if the purchaser
terminates the Sale and Purchase Agreement pursuant to the termination rights as detailed in
the Notice of Meeting. It is not refundable if the purchaser defaults on settlement.
Conditions
The approval of the transaction by Asset Plus’shareholders in accordance with Asset Plus’
constitution, the Listing Rules, the Companies Act 1993 and all applicable laws and notifying the
purchaser of such approval before 5pm on 3 June 2022.

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•Eliminates leasing and development/delivery risk on the property
•Reduces the company’s debt to a forecast 10% LVR post-
settlement
•Mitigates capital constraints at the property, absent any
significant leasing pre-commitments
•The $65.0 million sale price (plus GST, if any) represents a
premium to the 31 March 2022 independent valuation prepared
by JLL of $56.0 million
•The Net Present Value (NPV) of the transaction is $59 million,
which has been determined based on the discounted future
forecast cashflows up to and including settlement
Impact of transaction
35 Graham Street, Auckland
Assetplusnz.co.nz

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Annualised forecast impact on financial performance post settlement:
•As the property is currently vacant, and is to be sold vacant, there
is no reduction in gross rental income
•Saving on operating expenses (OPEX) of $0.552 million per annum
incurred by the landlord as the property is vacant
•Reduction in management fees, being 0.50% of the
property’svalue. This is forecast to be $0.325 million following
settlement
•Reduction in interest costs as the sale proceeds are to be applied as
a debt repayment. Estimated at $3.7m per annum after settlement
•Offsetting the above is the available depreciation claim in respect
to the property (for tax purposes only), currently at approximately
$0.7 million per annum but declining over time
Impact of transaction (continued)
35 Graham Street, Auckland
Assetplusnz.co.nz

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De-risks the company with forecast drawn debt expected to reduce to $19 million on
settlement by removing any further capital commitments (aside from Munroe Lane)
There has been a structural shift in office leasing sentiment and investor appetite in the
office sector following the COVID-19 pandemic, which has impacted on the ability to lease
the property to date
The inability to secure lease commitments under either development scenario for the
property has put further capital constraints on the company as the property cannot be
developed without significant prior tenant pre-commitment
The company does not have the balance sheet capacity, nor income profile across the
company’s assets to hold the asset vacant for an extended period of time
Rationalefor selling
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The current forecast margins associated with either development scenario are no longer
sufficient relative to the risk profile for delivery
Equity would likely be required to fund either development scenario and a capital raise is
not a feasible option at this time
The sale will realisecapital above the 31 March JLL independent valuation of $56 million
(based on the sale price and its NPV) – this compares to a material share price discount to
NTA
Rationalefor selling (continued)
Assetplusnz.co.nz

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•The proceeds from the sale will be applied to repay a
proportion of the company’s debt
•The initial deposit payable of $6.5 million (if sale is
approved) will be received in early June 2022, and will be
applied as a debt repayment with the remaining settlement
proceeds of $58.5 million also applied as a debt repayment
at settlement on 1 December 2023 (if not extended)
•Forecast drawn debt following settlement is expected to
be approximately $19 million which will represent a
forecast gearing (LVR) of 10%
•BNZ, the company’s lender, is supportive of the sale and
strategy to reduce debt
Proceeds of sale
35 Graham Street, Auckland
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•The sale of 35 Graham Street is driven by a change in market conditions since acquisition, which
has impacted on the ability to deliver on the intended strategy for the property
•The change in conditions has been threefold:
1.Adverse change in office leasing sentiment
2.Increased delivery risk driven by supply chain constraints and significant cost escalation
3.An increasing interest rate environment
•Cumulatively, all have impacted unfavourablyon the original business case
•The Munroe Lane, Albany development is now the company’s primary focus
•The sale of 35 Graham Street and completion of Munroe Lane is expected to set a stable
platform for the future of the company, with LVR forecast at 10% following settlement
Investment strategy
Assetplusnz.co.nz

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•The company will not incur financial penalties under the Sale and
Purchase Agreement if the transaction is not approved, and will
only incur a small amount of legal and meeting expenses
estimated at less than $0.1 million
•A reduction in interest costs (arising from debt repayment from
the deposit at settlement) will be lost.
•The property may take a prolonged period of time to secure
leasing commitments
•Likely require further equity to redevelop or refurbish the
property
•Potential for an event of review under the BNZ facilities if leasing
commitments are not achieved by 30 September 2022, and
potential to impact banking facility extension beyond current
expiry of September 2023.
Implications of sale not proceeding
35 Graham Street, Auckland
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Key risks of transaction
Assetplusnz.co.nz
DescriptionLikelihoodMitigation
Settlement risk
Property will be delivered vacant. If there was
a default on settlement by the purchaser,
Asset Plus would essentially have lost 20
months to either lease the property or find
another buyer.
Loan facilities will also likely need to be
refinanced and/or a further source of capital
secured.
Low– the purchaser and its
related entities have a
significant track record in
purchasing and developing
office buildings in Auckland.
Proven counterparty who has purchased
sites and developed extensively
throughout Auckland and the Victoria
Quarter.
10% deposit payable once transaction
approved.
Reputational risk for purchaser if they did
not settle the transaction.
Damage or destruction
to the property resulting
in termination of sale
and purchase agreement
If there is damage or destruction to 35
Graham Street which makes the property
untenantable, the purchaser has a right to
terminate the sale and purchase agreement.
This could result in Asset Plus needing to
reinstate the property in order to realise its
value.
Low– given low seismic
activity in Auckland and fire
protection systems installed on
the property.
Asset Plus currently holds material
damage insurance for 35 Graham Street
for a replacement value above $65
million.
If there was an insurance claim resulting
in destruction, this could be cash settled
with the insurer. The property could then
be demolished and sold as bare land.

Shareholder questions

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How to ask questions virtually
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Resolution

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That the sale of the property at 35 Graham Street, Auckland Central for
$65.0 million plus GST (if any) by Asset Plus Investments Limited, to
Mansons TCLM Limited (on terms described in further detail in the
Explanatory Notes within the notice of Special Meeting dated 19 May
2022), be approved for all purposes (including NZX Listing Rule 5.1.1(b)).
Resolution
Assetplusnz.co.nz

Thank You

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CHAIRMAN’S ADDRESS
I’m pleased to be given the opportunity to invite you to vote on the proposed sale of the property
at 35 Graham Street, Auckland for $65.0 million.
It is the Board’s unanimous recommendation that shareholders vote in favour of the proposed
resolution for the reasons set out in the Notice of Special Meeting sent to investors on the 19
th

of May.
As many of you will recall, the Property was acquired in mid-2019 with short-term holding
income over a 2-year period from settlement.
The Property had a number of redevelopment prospects including:
• a light refurbishment option; or
• an extensive redevelopment which included adding 2 or 3 floors of additional office space;
or
• something in between the two.
Design and consenting workstreams for the preferred redevelopment option were promptly
undertaken and resource consent for the proposed redevelopment was obtained in February
2021. We also commenced marketing activity with a view to securing leasing commitments.

At the time of acquisition, the office market sector was buoyant, with a shortage of prime space
available, particularly in that corridor west of the city. That made the acquisition and
development potential of the Property appealing. Also appealing was the flexibility and range of
options, including the ability to reduce the scale of the development if market conditions
changed.

At about the same time, we also secured the Munroe Lane development opportunity and
launched a $100.0 million capital raise to fund both projects. That capital raise was unfortunately
withdrawn due to turbulent market conditions and uncertainty as the COVID-19 pandemic
arrived on our shores. The reduced $60.2 million capital raise launched in September 2020 to
enable the Munroe Lane development opportunity to proceed. At the time this was predicated
on the basis that a further capital raise and/or sales of further assets would need to occur to
fund the 35 Graham Street development. However, as we stand here today, we have not
succeeded in generating any leasing pre-commitment for the Property and, at this point, with
the Company’s current share price relative to NTA, the Board does not consider that a capital
raise to fund the development of the Property is currently a viable option.

Although the fundamentals of the Property remained attractive and while a number of
prospective tenants indicated their interest in the Property, pre-leasing efforts have been
unsuccessful. Key factors include:
• various lockdowns;

• working from home mandates; and

• significant sublease space coming to market as other tenants in the area have reacted to
the market changes.
Notwithstanding, there have been a number of significant lease transactions occurring during
the period typically for near complete, or complete, new build construction projects with 6-star
Green Star ratings. This highlights the benefits of having the capability to build ‘on spec’ to
respond to occupier demands and a balance sheet to facilitate such an approach.

When these circumstances are placed alongside some of the more recent developments in the
market, such as:
• a now increasing interest rate environment;
• supply chain impacts on increasing construction costs; and
• softening of the investment market,
it becomes apparent that the best option for the Company is to forego this opportunity given
our current financial capability.

As you now know, the company received an unsolicited offer from Mansons in April. Following
some negotiation between the two parties that offer is before you now. Upon receiving the offer
and prior to signing the agreement, management were instructed to canvass the (probably limited
pool of) potential purchasers who would be in a position to acquire the Property. It quickly
became clear that the offer received from Mansons was considered by the Board to be the best
available offer and, that it was in the Company’s best interests that it be accepted.

Accordingly, given the circumstances above, the Board feels that this is a very good offer that
should be accepted by shareholders.

There is no question that there is increased delivery risk to deliver the 35 Graham Street
development in the current market. Holding the Property absent any leasing commitment would
be an ineffective use of capital. And so, a sale of the Property – albeit an opportunistic one – is
therefore the best currently available option to preserve value for Shareholders and to provide
a stable platform from which to move forward.

The $65.0 million (plus GST, if any) sale price for the Property represents:
• a premium to the 31 March 2022 independent valuation by JLL of $56.0 million; and
• an NPV of the Transaction of $59 million – also above the JLL valuation.
The sale proceeds will be utilised to retire debt, which is anticipated to reduce the Company’s
debt to approximately $19.0 million, or a 10% LVR upon settlement.

Settlement is set for 1 December 2023 at the earliest and a 10% ($6.5 million) deposit is payable
by Mansons once Shareholder approval to the Transaction is obtained. Once received, that
deposit will be utilised to retire debt.

Mansons, of course, has a demonstrated an enviable track record in the Auckland office market,
and we therefore consider Settlement risk to be low.

The extended Settlement date affords the Company time to complete the Munroe Lane
development and consider how market conditions develop over the intervening period. Upon
settlement of the Graham Street transaction, the Company will be well placed to consider future
opportunities as they arise.

I’d now like to introduce Stephen Brown-Thomas from Centuria who will provide further detail
on the sale of 35 Graham Street.

MANAGER’S ADDRESS

Thank you Bruce, and good afternoon everyone. I am Stephen Brown-Thomas, the Asset Plus
Fund Manager from Centuria NZ, the external manager of Asset Plus. I’ll now run through the
manager’s presentation, which should hopefully address any queries that you may have.
However, as noted by Bruce please ask any questions you may have, and we will answer these
at the conclusion of the presentation, and prior to voting on the resolution.

Firstly, I’d like to summarise the transaction for you. The purchaser is Mansons TCLM Ltd who
are a very well regarded, well-heeled private developer in Auckland. They are one of
Auckland’s largest developers of commercial office space over the past 15 years.

The purchase price is $65.0m and settlement is to occur on 1 December 2023, with a deposit
of $6.5m payable once the transaction becomes unconditional.

Mansons have a right to extend the settlement date out to 1 December 2024 and in exchange
the purchase price will increase to $68.0m and the deposit payable will increase to $13.6m.
Mansons must confirm this settlement extension option to us by 1 October 2023, at which
point the additional deposit will be payable.

An extended settlement date is not unusual for a transaction and property of this nature.

The transaction is completely unconditional from the purchaser’s side and is conditional only
upon Asset Plus shareholders approving the transaction today. This means that should
Mansons fail to settle the property on the settlement date they will forfeit their deposit(s) in
full, be liable to pay penalty interest, and we could also sue them for any loss on a subsequent
re-sale of the property.

The key circumstance in which Mansons could terminate the agreement is if the property was
so damaged or destroyed, and such damage was not made good prior to the scheduled
settlement date. The purchaser could elect to proceed with settlement at the purchase price,
less any insurance monies receivable. The property is currently insured in excess of the
purchase price of the property. The other circumstance that could give rise to termination by

the purchaser is if Asset Plus does not complete settlement of the property, on the settlement
date.

I’d also like to note that we retain the ability to lease parts or all of the property up until the
settlement date so long as we deliver the property up with vacant possession on settlement.
We are actively working on a number of leasing opportunities that are predominantly car
parking related. However, we do not expect any material leases to be entered into given the
current status of the property, and the timeframe through to settlement.

I’d now like to cover off the impacts of the transaction proceeding.

Firstly, it will eliminate leasing and development risk on the property, in what is currently a very
challenging environment. As you know we’ve actively been trying to lease this property under
two redevelopment scenarios for the past 2 years, with no tenant commitments secured to
date. The construction landscape has also significantly altered in the past 2 years as a result of
supply chain constraints, and escalation pressures with significant risk in construction delivery
at present.

Post settlement the company’s debt is forecast to reduce to circa $19m or a 10% loan to value
ratio, which is low by sector averages of approximately 30-35%.

The company is currently constrained by a small balance sheet relative to the scale of
developments and now alleviated risk for delivery of those developments. Without securing
significant leasing pre-commitment the company is not in a position to fund the redevelopment
of the property ‘on spec’.

The sale price represents a premium to the 31 March valuation undertaken by JLL which
valued the property at $56.0m. The net present value of the transaction is $59.0m, which is
based on the forecast cash flows associated with the asset up to the settlement date. $59.0m
was also adopted as the fair value of the property for the year ending 31 March.

Post settlement of the property the forecast financial impact of the transaction is as follows:

• There is no impact on the forecast income for the company as the property is currently
vacant
• There will be a saving of $0.5m per annum for operating expenses that will not need to
be funded on the property
• Management fees for the company will reduce, a saving of $0.3m per annum
• Interest costs for the company will reduce as sale proceeds are utilised to repay debt.
These savings are estimated at $3.7m per annum
• The ability to claim depreciation on the property will be lost once the property settles,
this is approximately $0.7m per annum, but would decline over time reflecting the
diminishing value of the asset.

Now that we’ve covered off the impacts of the transaction, I’d like to set out the rationale for
divesting this asset. Firstly, it will de-risk the company by:

• reducing debt to a 10% LVR; and
• removing significant capital commitments to redevelop the property that would need to
be funded through our debt facilities, that would be wholly contingent on securing pre-
leasing commitments.
As noted, there has been a structural shift in sentiment over the past 2 years relating to office
leasing as a result of the Covid-19 pandemic. This has adversely impacted on our ability to
secure tenant commitments under either redevelopment scenario on the property. Given this
lack of pre-leasing we are unable to unlock the debt facilities available to us to redevelop the
property ‘on spec’. The company unfortunately does not have the balance sheet capacity, nor
income profile to be able to hold the asset vacant for an extended period of time.

The forecast development margins, and yield on cost for either development scenario on the
property are no longer sufficient relative to the risk associated with delivery in the currently
challenging environment, reflecting the changing macro-economic landscape and increasing
interest rate environment.

Given the inability to debt fund either redevelopment scenario without leasing pre-
commitment, equity would be required to redevelop the property ‘on spec’, however raising
capital at this time is not feasible given the current share price, discount to NTA, and the price
capital was raised at in the 2020 raise.

The sale will also realise funds above the 31 March JLL independent valuation.

The proceeds of sale will be wholly used to repay part of the companies debt facilities. The
initial deposit, and any subsequent deposit if the extended settlement date option is exercised
will both be used to repay debt. On settlement the remainder of proceeds will also be utilised
to repay debt, with the companies debt facilities forecast to reduce to circa $19m or a 10%
loan to value ratio.

BNZ remain supportive of the sale and strategy to reduce the companies debt facilities.

This property was purchased pre the covid-19 pandemic in 2019. The strategy was to
redevelop the property under either a full redevelopment, or partial redevelopment scenario.
Market conditions have changed drastically since acquisition with the onset of the covid-19
pandemic and subsequent impacts, particularly on the office leasing market. These changes
have adversely impacted on our ability to deliver on the intended strategy for the property.
The changes have been threefold:

1. Adverse change in office leasing sentiment
2. Increased delivery risk driven by supply chain constraints, labour scarcity and significant
cost escalation

3. And an increasing interest rate environment
Which have all impacted on our ability to deliver on the original business case.

I appreciate that we set out to grow the company and portfolio through this opportunity, and
the Munroe Lane development, however circumstances have changed, and the divestment of
this asset is the right decision given the constraints of the company, and current market
conditions we are facing.

Management remain committed to delivering the Munroe Lane development, which will then
provide a stable platform for the company to move forward from.
If shareholders do not approve the transaction today, we will incur costs of approximately
$0.1m associated with the shareholder meeting and legal expenses.

In addition, the forecast reduction in interest costs will be lost, it may take a protracted period
of time to secure leasing commitments for the property, further equity would be required to
redevelop or refurbish the property, and there may be potential for an event of review under
the BNZ banking facilities if leasing commitments are not obtained on the property by 30
September 2022.

Management are also of the view that we would be unlikely to secure any alternative
purchaser for the property, particularly at the currently contracted purchase price.

The key risks of the transaction are if Mansons fail to settle the property on the settlement
date, and if a damage or destruction event occurs resulting in Mansons terminating the sale and
purchase agreement.

We believe the risk of Mansons defaulting on settlement is low given their track record for
transactions of this nature. The fact that they would forfeit their deposits, be liable for penalty
interest and we would have the ability to sue them for any subsequent loss on re-sale of the
property.

We also deem the damage and destruction risk to be low given the property’s seismic capacity,
the low seismic activity in the Auckland region, and the fact that the property has fire
protection systems installed and the property is inspected on a weekly basis by management.
We also hold replacement insurance in excess of the purchase price, and could potentially cash
settle any insurance claim if the building was destroyed and sell the bare land.

That concludes the managers presentation, I’ll now pass back over to Bruce to facilitate
responses to any questions that shareholders may have.