Developer offers sweetener for Sylvia Park project

Kiwi Income Property Trust's managers yesterday tossed shareholders a sweetener over the contentious Sylvia Park retail development in Auckland, bumping up the project's yield and saying it would manage the project "at cost".

The trust's manager, Kiwi Income Properties (KIP), said it had decided to rebate up to $4 million in management fees in order to bring the yield on completion from the Sylvia Park project up to 7.5 per cent from the 7 per cent it had earlier set. The project is due to be completed in mid-2007.

It also said it would manage the Auckland shopping complex's development at cost, "enhancing the success" of the project.

KIP's project management fees would continue to be capped at the present fee of 3 per cent of project cost. It said the moves followed discussions with key institutional investors who had indicated their displeasure with earlier arrangements by voting with their feet.

KIP chairman Sean Wareing said the fee rebate and reduction in project management fees were further examples of the manager aligning its interests with those of unit-holders.

Some institutional investors were angered by the unspectacular long-term yield from the $538 million Sylvia Park development and last year's purchase of a cornerstone holding in rival landlord Capital Properties of Wellington.

Opponents of Sylvia Park argued that it could be too risky.

A KIP spokeswoman said the manager was recognising concerns about the project's yield and other issues.

- NZPA