Property settlement, unit issuance and operating expenses

PLP - Property Settlement, Issuance of Units and Property Operating Expenses: Settlement of purchase of Northland kiwifruit orchard Settlement of the purchase from Seeka Limited of the Northland kiwifruit orchard was completed on 30 September 2019 by Booster's Private Land and Property Portfolio, the wholesale property fund in which the PLP invests. This transaction was announced by PLP on 26 September 2019 at the time the agreement with Seeka was signed. The purchase price was $15.5 million and this was funded by the issue of additional units in PLP (as detailed below) and the allocation of cash-on-hand together with the drawdown on $6.0 million of additional bank funding. Full details of the property and the bank funding arrangements are set out in PLP's Other Material Information (OMI) document available from NZX.com and disclose-register.companiesoffice.govt.nz]. The OMI is an important document and is regularly updated as material changes occur to information about PLP (and the Private Land & Property Portfolio wholesale fund). The OMI now contains details of this additional property held by the wholesale fund and the value of all properties, which now total $60.0 million against which bank funding of $24.54 million has been obtained. Inclusive of cash and net working capital, the Net Asset Value (NAV) of the PLP as at 30 September 2019 was $36,644,893, in total (NAV per unit = $1.0444). Issuance of Units completed Pursuant to Rule 3.13.2 of the Main Board Listing Rule, Booster Investment Management Limited, in its capacity as manager of the Private Land and Property Fund ('Fund' or NZX:PLP), confirms it has issued additional 4,308,676 ordinary units in the Fund effective 30 September 2019 (the number of units allotted is confirmed 2 business days later on completion of the unit pricing process). The units were issued to the Booster KiwiSaver Fund and Booster's other superannuation and investment funds to facilitate the settlement of the recent kiwifruit orchard purchase by the Private Land and Property Portfolio in which the PLP invests. Impending issue of further Units Booster advises also that as at 30 September 2019 it had received applications totalling $1,347,953.70 in value as part of the process available for investors to apply direct to the manager for the issuance of units in PLP. The number of units to be issued will be set by the NAV per unit of the fund as at 1 October 2019 and this will be confirmed on 3 October (being 2 business days later) and the total number of units issued will be advised to NZX and investors. This early interest in PLP since it was listed on NZX on 18 September 2019 is welcome support for the efforts that Booster has taken to provide this investment option to retail investors. A portion of these units ($150,000 in value) are to be issued to the parent of the manager as part of the process announced on 20 September 2019 under which Booster has sought to make PLP units available for purchase by investors through NZX. Booster will offer those units at their NAV unit price. Change to Property Operating Expense Ratio While Booster's fee as manager of the Fund is calculated at 1% of the NAV of the fund, it is currently a requirement of the particular disclosure obligations under the Financial Markets Conduct Act that apply to PLP (under Schedule 4 of the Act) that costs related the operation of the properties which are incurred by the manager, even where they are paid to third parties for expenses such as rates, insurance and bank interest, have to be treated as a fund charge. However, where the same costs are incurred by a lessee (such as applies with the newly acquired kiwifruit orchard), these are not reported as a fund charge. As a consequence, PLP has increased its total income (being the fixed rental) but has no material additional property expenditure that is reportable, with the result that the property operating expense ratio of the Fund will reduce from 3.61% (as disclosed in the Product Disclosure Statement dated 18 September 2019), to 3.1%. Likewise, the required total disclosed fund charge figure of 4.71% has reduced to 4.2%. This reduction does not affect the investment returns that are the aim of the fund (which have been expressed as being pre-tax but after all fees and charges, including property expenses and interest charges). The inclusion of property related costs that Booster pays to third parties as part of disclosed fund charges (while currently required under the FMCA) practically distorts any comparison between the amounts paid to Booster as manager of PLP and managers of other property funds that have no property operating activities (because those managers act as a passive lessor or a fund of funds) or which offer company shares rather than unit funds i.e. managed investment schemes like PLP. Booster will continue to engage with the FMA on this issue while continuing to provide a breakdown of all fund changes so investors understand the impact of each type of cost that is reported. End CA:00342063 For:PLP Type:SECISSUE Time:2019-10-02 15:10:54