PFI Informationmemorandum

BETTER
TOGETHER
NOTICES OF MEETING + This is an important document + requires your immediate attention.
INFORMATION MEMORANDUM
You should read the whole document before deciding whether and how to vote
Relating to the proposed on the resolutions to approve the Merger. If you are in any doubt as to any
merger of Property aspect of the Merger, you should consult your financial or legal adviser.
For Industry Limited
& Direct Property This document provides information to PFI and DPF shareholders to assist
Fund Limited their decision whether to approve the Merger. For DPF Shareholders, it also
comprises a simplified disclosure prospectus for shares in PFI to be issued
under the Merger, being shares of the same class as existing shares in PFI
22 May 2013 quoted on the NZX Main Board.
CONTENTS
Important Information 01
Notices of Meeting 02
Section 1: Introduction + Key Information 07
Section 2: Merger Highlights 15
Section 3: Overview of the Merger 21
Section 4: Profile of the Merged Group Business 35
Section 5: Directors + Management 49
Section 6: Prospective Financial Information 55
Section 7: Additional Information 79
Section 8: Scheme Plan, Objection
Rights + Court Documents 85
Independent Expert Report 105
Independent Appraisal Report 161
Glossary 193
Directory 196
For the purposes of Regulation 16 of the Securities Regulations,

the matters required to be stated or contained in this
Information Memorandum under Schedule 10 of the Securities
Regulations are set out in this Information Memorandum
as follows:
Matter Schedule 10 Page(s)

Information at front of simplified Clause 1 Front page, 1
disclosure prospectus
Names, addresses, and other Clause 2 80
information
Experts and underwriter Clause 3 80
Terms of offer and securities Clause 4 82
Relationship with listed securities Clause 5 82
Information available under issuer’s Clause 6 83
disclosure obligation
Financial Statements Clause 7 83
Additional interim financial Clause 8 Not
statements applicable
Access to information and Clause 9 83
statements
Directors’ statement Clause 10 83
Bridon, 6-8 Greenmount Drive, East Tamaki, Auckland

IMPORTANT
INFORMATION
This Information Memorandum is • the signed consent of each Valuer to Property statistics
dated 22 May 2013 and gives you notice the inclusion of the valuation figures
All figures and values relating to the
of the Special Meetings and provides attributed to that Valuer appearing
property portfolios of PFI and DPF have
information to assist your decision on in this Information Memorandum.
been calculated on the basis of contracted
whether to approve the Merger. annual rental income, unless otherwise
Consideration period stated. Where appropriate, market rental
Offer document Pursuant to section 43D of the Securities on vacant space and other market based
For the purposes of the Securities Act, Act, PFI is unable to allot any PFI Shares estimates have been assumed for the
this Information Memorandum is also a or accept any applications or purposes of some calculations.
simplified disclosure prospectus in respect subscriptions in respect of the Offer
of the offer of PFI Shares by PFI to DPF during the Financial Markets Authority Investment decisions
Shareholders pursuant to the Merger and “Consideration Period”. This Information Memorandum does not
contains the information required by take into account the individual investment
Schedule 10 of the Securities Regulations. The Consideration Period commences on
the date of registration of this Information objectives, financial situation or particular
A copy of this Information Memorandum, Memorandum and ends at the close of the needs of any particular shareholder. You
signed by or on behalf of each director day which is five working days after the may wish to consult your broker or other
of PFI and each Promoter and having date of registration. The Financial professional adviser before deciding whether
attached to it copies of the documents Markets Authority may shorten this or not to vote to approve the Merger.
and other materials required by section Consideration Period, or extend it by no
41 of the Securities Act, has been more than five additional working days. Forward-looking statements
delivered to the Registrar of Financial
Certain statements in this Information
Service Providers in accordance with Continuous Disclosure Memorandum constitute forward-looking
section 42 of the Securities Act.
PFI is subject to a continuous disclosure statements. Such forward-looking
The documents required by section 41 obligation that requires it to notify certain statements involve known and unknown
of the Securities Act to be attached to the material information to NZX for the risks, uncertainties and other factors which
copy of the Information Memorandum purposes of that information being made may cause the actual results, performance
delivered to the Registrar of Financial available to participants in the NZX and achievements of PFI, DPF and/or the
Service Providers are: Main Board. You should note that other Merged Group to be materially different
important information about PFI is from any future results, performance or
• the market announcements referred achievements expressed or implied in such
to in Section 7 of this Information contained in the disclosures it has made
pursuant to its continuous disclosure forward-looking statements. Such factors
Memorandum; include, among other things, general
obligations under the Securities Markets
• PFI’s latest audited financial statements Act and the Listing Rules. That economic and business conditions,
for the year ended 31 December 2012; information is available on NZX’s website regulatory risk, competition, the property
at www.nzx.com by searching “PFI”. market and other factors presented in this
• relevant agent authorities where an Information Memorandum.
agent has signed this Information
Memorandum on behalf of a director NZX Main Board Listing Given these uncertainties, PFI and DPF
of PFI or on behalf of a Promoter; shareholders are cautioned not to place
The PFI Shares offered to DPF
undue reliance on such forward-looking
• the signed consent of the Independent Shareholders have been accepted for
statements.
Expert to the Independent Expert quotation by NZX on the NZX Main
Report and the statements in this Board. PFI will take steps to ensure that In addition, under no circumstances
Information Memorandum attributed the PFI Shares are, immediately after should the inclusion of such forward-
to the Independent Expert appearing allotment, listed. However, NZX accepts looking statements in this Information
in this Information Memorandum; no responsibility for any statement in this Memorandum be regarded as a
Information Memorandum. The NZX representation or warranty by PFI, DPF,
• the signed consent of the Investigating Main Board is a registered market DPFM and their respective directors
Accountant to the Investigating operated by NZX, which is a registered or any other person with respect to the
Accountant Report and the statements exchange regulated under the Securities achievement of the results set out in such
in this Information Memorandum Markets Act. statements, or that the underlying
attributed to the Investigating assumptions used will in fact be the case.
Accountant appearing in this
Information Memorandum;
Definitions PFI, DPF, DPFM and their respective
Capitalised terms used in this Information directors disclaim any responsibility to
• the signed consent of the Independent Memorandum (including the Notices update any such risk factors or publicly
Appraiser to the Independent Appraisal of Meeting and the explanatory notes to announce the result of any revisions to
Report and the statements in this the Notices of Meeting) have the specific any of the forward-looking statements
Information Memorandum attributed meaning given to them in the Glossary contained in this Information Memorandum
to the Independent Appraiser appearing or elsewhere in this Information to reflect future developments or events,
in this Information Memorandum; and Memorandum. other than where they are required to
do so by law.
IMPORTANT INFORMATION 01
NOTICES
OF
MEETING
As a shareholder of PROPERTY FOR Resolution 3: Director Remuneration
Conditional on Resolutions 1 and 2 also
PFI or DPF, you are INDUSTRY LIMITED being approved, it is resolved as an
ordinary resolution that:
entitled to vote whether Notice of meeting of shareholders
“The total director remuneration is
to approve the Merger of Property
to approve the Merger For Industry Limited and Direct increased from $180,000 per annum to
Property Fund Limited. $280,000 per annum, being an increase
of PFI and DPF at Notice is given that a meeting of the
of $100,000 per annum, with effect for
the financial year commencing 1 July
the applicable Special shareholders of Property For Industry 2013 pursuant to NZSX Listing Rule
Limited will be held at Level 4 Lounge, 3.5.1.”
Meeting to be held on South Stand, Eden Park, Gate P5,
Reimers Ave, Mount Eden, Auckland By order of the Board.
24 June 2013. 1024 on 24 June 2013 commencing at
3.00pm, to consider and, if thought fit,
You are encouraged to read all of the pass the resolutions set out below.
materials provided to you and to vote Peter Masfen
at the applicable Special Meeting by RESOLUTIONS Chairman
attending in person or by sending 22 May 2013
your Voting/Proxy Form in accordance Resolution 1: Merger
with the instructions on the Conditional upon Resolution 2 also
Voting/Proxy Form. being approved, it is resolved as a special
resolution that:
If you are not attending your Special
Meeting, but wish to vote, your Voting/ “The scheme of arrangement to merge
Proxy Form must be returned in Property For Industry Limited and Direct
accordance with the instructions Property Fund Limited, as described in
on the Voting/Proxy Form by: the scheme plan and other information
contained in the Information Memorandum
• 3.00pm on 22 June 2013 for
dated 22 May 2013 are approved (it being
PFI Shareholders; and
noted that the scheme of arrangement will
• 11.30am on 22 June 2013 for not be implemented until, among other
DPF Shareholders. things, Final Court Orders for the scheme
under Part 15 of the Companies Act 1993
have been granted).”
Resolution 2: Amended and

Restated Management Agreement
Conditional upon Resolution 1 also being
approved, it is resolved as an ordinary
resolution that:
“The amendment and restatement of
the Management Agreement between
Property For Industry Limited and PFIM
Limited, in the manner described in the
Information Memorandum dated 22 May
2013, is approved.”
02 NOTICES OF MEETING
EXPLANATORY NOTES Explanatory Note 2: Approval of the Explanatory Note 3: Approval of
amended and restated Management director remuneration (Resolution 3)
PFI Shareholders are encouraged to read Agreement (Resolution 2)
all of the materials accompanying this Resolution 3 seeks approval from PFI
notice of meeting and to vote at the Resolution 2 seeks approval from Shareholders by way of ordinary
meeting by attending in person or by PFI Shareholders by way of ordinary resolution to increase the total director
proxy or by representative (if you are a resolution of the amendment and remuneration from $180,000 per annum
body corporate) in accordance with the restatement of the Management to $280,000 per annum, being an
instructions set out in these explanatory Agreement between PFI and PFIM increase of $100,000 per annum.
notes and on the Voting/Proxy Form. Limited, in the manner described
Pursuant to Listing Rule 3.5.1, PFI must
For the Merger to proceed, PFI and DPF in Section 1 of this Information
obtain shareholder approval by ordinary
shareholders need to approve the Merger. Memorandum (Proposed Amendment).
resolution to the payment of remuneration
Resolutions 1 and 2 are conditional on Pursuant to Listing Rule 9.2.1, PFI to directors in their capacity as a director
the other resolution being approved. must obtain shareholder approval, by of PFI or a subsidiary of PFI. At the
Resolution 3 is conditional on both ordinary resolution, to PFI’s entry into 2008 annual meeting, PFI Shareholders
Resolutions 1 and 2 being approved. any “Material Transaction” where a approved an increase in director
“Related Party” is, or is likely to become, remuneration to $180,000 per annum.
Explanatory Note 1: Approval of a direct or indirect party to the Material Currently, $80,000 is paid per annum
the Merger (Resolution 1) Transaction or to at least one of a related to the chairman and $50,000 per annum
series of transactions of which the to each of the independent directors.
Resolution 1 seeks approval from PFI
Material Transaction forms part. Gregory Gregory Reidy, as the director
Shareholders by way of special resolution
Reidy is a director of both PFI and PFIM representing the Manager, does not
of the Merger of PFI and DPF pursuant
Limited, and has a material economic receive any director fees (in accordance
to a Court approved scheme of
interest in PFIM Limited by virtue of his with PFI’s remuneration policy).
arrangement under Part 15 of the
ownership interest in DPF Management
Companies Act 1993. The terms of the If the Merger is approved, John Waller
Limited (the sole shareholder of PFIM
Merger are described in the Scheme Plan and Arthur Young (current directors
Limited). Accordingly, PFIM Limited is
and other information contained in this of DPF) will be appointed as directors
a “Related Party” of PFI and PFI is
Information Memorandum. of PFI.
seeking shareholder approval as the entry
As required by the Initial Court Orders into the Proposed Amendment is a Where the number of PFI’s directors
granted in respect of the Merger, the “Material Transaction” (on the grounds increases, Listing Rule 3.5.1 permits
resolution will be put as a special that the management fees payable under PFI (without approval by ordinary
resolution and, if approved by the the Proposed Amendment is likely to resolution to increase the total
required votes, will be binding on all exceed an amount equal to 1% of the remuneration) to pay the additional
PFI Shareholders. A special resolution average market capitalisation of PFI). directors remuneration which does not
of PFI means a resolution approved by exceed the average amount paid to each
An independent appraisal report, as
at least 75% of the votes of those PFI of the other non-executive directors
required by Listing Rule 9.2.5, has been
Shareholders entitled to vote and voting (other than the chair).
prepared by PwC in relation to the
on the resolution.
Proposed Amendment and is included As Gregory Reidy does not receive
PFI will also require approval from in this Information Memorandum. any remuneration, the average amount
PFI Shareholders by way of ordinary paid to non-executive directors is
As required by Listing Rule 9.2.1,
resolution if the Merger triggers the $33,333. The increased remuneration
Resolution 2 will be put as an ordinary
threshold in Listing Rule 9.1 (for pool therefore allows for the new
resolution and, if approved by the
example, if the Merger results in PFI non-executive directors to be paid
required votes, will be binding on all
acquiring assets in respect of which the the same amount as the current
PFI Shareholders. An ordinary resolution
gross value is in excess of 50% of the independent directors.
of PFI means a resolution passed by a
average market capitalisation of PFI).
simple majority of those PFI Shareholders Resolution 3 is conditional on Resolutions
An ordinary resolution of PFI means a
entitled to vote and voting on the 1 and 2 also being approved.
resolution passed by a simple majority
resolution. Gregory Reidy, PFIM Limited
of those PFI Shareholders entitled to
and any “Associated Person” of either of
vote and voting on the resolution. This
them are not entitled to cast a vote on
requirement will be satisfied if the special
Resolution 2.
resolution in relation to Resolution 1 is
approved by the requisite majority. Resolution 2 is conditional on Resolution 1
also being approved.
Resolution 1 is conditional on Resolution
2 also being approved.
NOTICES OF MEETING 03
Explanatory Note 4: Voting How you can vote? Explanatory Note 5: Objection
Voting at the PFI meeting shall be PFI Shareholders can vote in any one Rights Relating to the Merger
decided by a poll of PFI Shareholders of the following ways: The Court makes the final decision
entitled to vote and voting. Set out on whether or not to implement the
• In person
below are details on voting matters Merger and can decide not to grant the
for this meeting. • By proxy Final Court Orders. PFI Shareholders
have the right to appear and be heard
A Voting/Proxy Form for use at the • By representative (if the shareholder at the hearing for the Final Court Orders
PFI meeting is enclosed with this notice is a body corporate) in respect of the Merger. Details of the
of meeting, which you should bring to
procedure and timetable to be heard
the meeting as it also constitutes your Required Votes
by the Court are set out in more detail
voting paper. Resolution 1: At least 75% of the votes in Section 8 of this Information
of those shareholders entitled to vote and Memorandum.
Who can vote? voting on the resolution.
Every PFI Shareholder whose name
is registered in the share register as at Resolution 2: More than 50% of the votes
5.00pm on 23 June 2013 and who is of those shareholders entitled to vote and
present at the meeting in person or by voting on the resolution.
proxy or in the case of a body corporate Resolution 3: More than 50% of the votes
shareholder, by representative, can vote of those shareholders entitled to vote and
in respect of Resolutions 1, 2 and 3 and voting on the resolution.
shall have one vote in respect of every
fully paid PFI Share held by that PFI What is the quorum?
Shareholder at that time, subject to the The quorum for the meeting is three
following voting restriction. PFI Shareholders.
In respect of Resolution 2, Gregory If within 30 minutes after the time
Reidy, PFIM Limited and any appointed for the meeting a quorum
“Associated Person” of either of them is not present, the meeting shall be
are not entitled to cast a vote. adjourned to the same day in the
In respect of Resolution 3, John Waller, following week at the same time and
Arthur Young, the current directors of place (or to such other date, time and
PFI and any “Associated Person” of any place as the board may appoint) and, if
of them are not entitled to cast a vote. at the adjourned meeting a quorum is not
present within 30 minutes after the time
appointed for the meeting, the PFI
Shareholders or their proxies or their
representatives present will constitute
a quorum.
DIRECT PROPERTY EXPLANATORY NOTES How you can vote?
DPF Shareholders can vote in any one
FUND LIMITED DPF Shareholders are encouraged to
read all of the materials accompanying of the following ways:
Notice of meeting of shareholders this notice of meeting and to vote at the • In person
to approve the Merger of Direct meeting by attending in person or by
proxy or by representative (if you are a • By proxy
Property Fund Limited and Property
For Industry Limited. body corporate) in accordance with the • By representative (if the shareholder
instructions set out in these explanatory is a body corporate)
Notice is given that a meeting of the notes and on the Voting/Proxy Form.
shareholders of Direct Property Fund For the Merger to proceed, PFI and DPF Required Votes
Limited will be held at Level 4 Lounge, shareholders need to approve the Merger. At least 75% of the votes of those
South Stand, Eden Park, Gate P5,
shareholders entitled to vote and voting
Reimers Ave, Mount Eden, Auckland Explanatory Note 1: Approval of
on the resolution.
1024 on 24 June 2013 commencing at the Merger
11.30am, to consider and, if thought fit, The resolution being put to shareholders What is the quorum?
pass the special resolution set out below. seeks approval of the Merger of DPF and The quorum for the meeting is five
PFI pursuant to a Court approved scheme DPF Shareholders.
SPECIAL RESOLUTION: of arrangement under Part 15 of the
TO APPROVE THE MERGER Companies Act 1993. The terms of the If within 30 minutes after the time
Merger are described in the Scheme Plan appointed for the meeting a quorum
It is resolved as a special resolution that: and other information contained in this is not present, the meeting shall be
“The scheme of arrangement to merge Information Memorandum. adjourned to the same day in the
Direct Property Fund Limited and following week at the same time and
As required by the Initial Court Orders place (or to such other date, time and
Property For Industry Limited, as granted in respect of the Merger, the
described in the scheme plan and other place as the directors may appoint) and,
resolution will be put as a special if at the adjourned meeting a quorum is
information contained in the Information resolution and, if approved by the
Memorandum dated 22 May 2013, not present within 30 minutes after the
required votes, will be binding on all DPF time appointed for the meeting, the DPF
are approved (it being noted that the Shareholders. A special resolution of
scheme of arrangement will not be Shareholders present will constitute
DPF means a resolution approved by a quorum.
implemented until, among other things, at least 75% of the votes of those DPF
Final Court Orders for the scheme under Shareholders entitled to vote and voting Explanatory Note 3: Objection
Part 15 of the Companies Act 1993 on the resolution. Rights Relating to the Merger
have been granted).”
Explanatory Note 2: Voting The Court makes the final decision
By order of the Board. on whether or not to implement the
Voting at the DPF meeting shall be Merger and can decide not to grant
decided by a poll of DPF Shareholders the Final Court Orders. DPF
entitled to vote and voting. Set out Shareholders have the right to appear
Arthur Young below are details on voting matters and be heard at the hearing for the
Chairman for this meeting. Final Court Orders in respect of the
22 May 2013 A Voting/Proxy Form for use at the Merger. Details of the procedure and
DPF meeting is enclosed with this notice timetable to be heard by the Court are
of meeting, which you should bring to set out in more detail in Section 8 of
the meeting as it also constitutes your this Information Memorandum.
voting paper.
Who can vote?

Every DPF Shareholder whose name
is registered in the share register as at
5.00pm on 23 June 2013 and who is
present at the meeting in person or by
proxy or in the case of a body corporate
shareholder, by representative, can vote
and shall have one vote in respect of every
fully paid DPF Share held by that DPF
Shareholder.
NOTICES OF MEETING 05
SECTION
Introduction +
Key Information
logically
TOGETHER
Information Management Group, 8 McCormack Place, Ngauranga Gorge, Wellington INTRODUCTION + KEY INFORMATION 07
What is the purpose
of this Information
Memorandum?
The shareholders of both PFI and DPF are being asked to separately consider and
approve resolutions to approve the Merger. PFI Shareholders are also being asked to
consider and approve proposed changes to the PFI Management Agreement and an
increase to director fees which are proposed as part of the Merger. The resolutions are
set out in the Notices of Meeting included as part of this Information Memorandum.
This Information Memorandum What do your directors Who will be the proposed directors
describes the terms of the Merger and recommend? of the Merged Group?
provides other information to assist the
shareholders with this decision, including: The directors of both PFI and DPF The board of the Merged Group will
believe that the Merger is compelling initially comprise Peter Masfen,
• a report prepared by Deloitte, as the and is in the best interests of their Humphry Rolleston and Anthony
Independent Expert, which considers, shareholders. The directors unanimously Beverley (PFI’s current independent
the merits and fairness of the Merger; recommend that their respective directors), Arthur Young (DPF’s
and shareholders vote to approve the Merger. current chairman), John Waller (a DPF
• an appraisal report prepared by PwC, independent director) and Gregory Reidy
as the Independent Appraiser, which What is the opinion of the (who will remain on the board as the
management representative). Further
considers the fairness of the proposed Independent Expert in relation
changes to the PFI Management information on all of the directors is set
to the Merger? out in Section 5 of this Information
Agreement.
PFI and DPF have jointly commissioned Memorandum.
You should read this Information Deloitte to prepare an independent report
Memorandum in its entirety before As part of the Merger, PFI Shareholders
on the merits and fairness of the Merger. are being asked to approve an increase in
deciding whether or not to approve
the Merger. Deloitte concluded, in their Independent total director remuneration from $180,000
Expert Report, that: to $280,000. This will enable PFI to pay
Arthur Young and John Waller annual
What happens under the Merger? “In our opinion, after having regard to all director’s fees of $50,000, which is equal
PFI and DPF are seeking to merge their relevant factors, the Merger has merit for the to the amount currently paid to PFI’s
respective businesses pursuant to a Court shareholders of both PFI and DPF, and the independent directors (other than
approved scheme of arrangement. benefits of the Merger are shared fairly the chairman who receives $80,000
between the shareholders of PFI and DPF.” per annum).
Under this scheme, PFI and DPF will
merge by way of amalgamation, with The conclusions of the Independent
DPF Shares converting into PFI Shares Expert should be read in the context
and PFI continuing as the amalgamated of the full Independent Expert Report.
company. On Merger, former PFI A copy of the Independent Expert Report
Shareholders will hold 53.6%, and former is included as part of this Information
DPF Shareholders will hold 46.4%, of Memorandum.
the shares in the Merged Group.
08 INTRODUCTION + KEY INFORMATION

What are the management The amendment requires the approval “In our opinion, the proposed changes to
arrangements for the Merged of PFI Shareholders under the Listing PFI’s Management Agreement are “fair” to
Rules as they are a “Material the Non-Associated Shareholders of PFI.”
Group following the Merger? Transaction” with a “Related Party”1.
The conclusions of the Independent
Following the Merger, the Merged Group
A summary of the key terms of the Appraiser should be read in the context
will continue to be managed by PFIM,
PFI Management Agreement and a of the full Independent Appraisal Report.
PFI’s existing manager, under the terms
description of the key differences between A copy of the Independent Appraisal
of the PFI Management Agreement
the current PFI Management Agreement Report is included as part of this
(as amended as part of the Merger).
and the DPF Management Agreement are Information Memorandum.
In conjunction with the Merger, PFI has set out in Section 4 of this Information
agreed to update the base management Memorandum. Further information on Opinion of the Independent Expert
fee structure payable under the PFI the changes to the PFI Management in relation to the proposed changes
Management Agreement to reflect a Agreement is set out in the Independent to the PFI Management Agreement
blending of the current PFI and DPF Appraisal Report. As part of the Independent Expert
base management fees and to make Report, Deloitte were also asked to
certain other amendments to reflect: Opinion of the Independent comment on the management fee that
Appraiser in relation to the will be payable by DPF Shareholders
• the Merged Group’s gearing policy proposed changes to the PFI (once they become PFI Shareholders)
(as discussed in Section 4); Management Agreement as against the current DPF management
• the level of cover for PFIM’s required PwC, who has been engaged to prepare fees. Deloitte concluded that:
professional indemnity insurance an independent appraisal report in
“We also believe the management fee changes
increasing to $5 million; respect of the proposed changes to the
that DPF shareholders will experience if the
PFI Management Agreement, has
• current accounting terminology; Merger proceeds are fair.”
concluded that the proposed changes are
• redundant provisions/schedules; and fair to PFI Shareholders not associated The conclusions of Deloitte should be read
with the Manager of PFI. in the context of the full Independent
• statutory reference changes which have Expert Report. A copy of the Independent
occurred since the agreement was PwC concluded, in their Independent
Expert Report is included as part of this
originally entered into. Appraisal Report, that:
Information Memorandum.
Votes, decisions and choices for shareholders

Key dates*
PFI Shareholders DPF Shareholders

3.00pm on 22 June 2013 11.30am on 22 June 2013 Voting/Proxy Forms due to be returned by shareholders
voting by way of proxy
3.00pm on 24 June 2013 11.30am on 24 June 2013 Special Meetings
24 June 2013 Last day for notices of opposition or notices of appearance

to Court in respect of the Scheme of Arrangement to give
effect to the Merger
26 June 2013 Final Court Orders applied for and granted
1 July 2013 Merger Date (effective date)
1 July 2013 Shares allotted by PFI
* Dates are indicative only and may change and are subject to Court approval of the Scheme of Arrangement.
Gregory Reidy is a director of both PFI and PFIM Limited and also an indirect shareholder of PFIM Limited. Accordingly, PFIM Limited is a “Related Party” of PFI.
1
INTRODUCTION + KEY INFORMATION 09

Who votes to approve the Merger? • 3.00pm on 22 June 2013 for PFI If, as a DPF Shareholder, you vote against
Shareholders; and the Merger but the Merger proceeds, you
The Merger must be approved by a will still receive PFI Shares under the
special resolution of the shareholders • 11.30am on 22 June 2013 for DPF
terms of the Merger for your DPF Shares
of both PFI and DPF. Shareholders.
(on the basis set out in this Information
The changes to the PFI Management Memorandum). Those shares will be
Agreement and an increase to director Factors for shareholders tradable on the NZX Main Board.
fees must be approved by ordinary to consider
resolution of the PFI Shareholders. Each PFI Shareholder and DPF What are the risks?
Shareholder should take into account the The Merger is not without risks. The
What do I need to do? following considerations before deciding risks associated with the Merger broadly
how to cast his or her vote in relation to fall into the following categories:
Having considered the materials
the Merger:
circulated to you, you should decide • merger-specific risks – such as the risk
whether you wish to approve the Merger, • the merits of the Merger that the associated with PFI and DPF’s
and vote accordingly. directors of PFI and DPF consider respective due diligence on each other’s
will be achieved as part of the Merger; property portfolio;
Do I have to vote? • the investment you will hold as a result • Merged Group business risks – the
You do not have to vote, but have a right of the Merger; principal risk being that shareholders
to do so. Your directors encourage you • the future prospects of your investment of the Meged Group may not be able
to read all of the documents carefully, on an as is, standalone basis, absent the to recoup their investment or may not
to make a decision and to vote, either by Merger; receive the returns they expect; and
proxy or by attending the applicable
Special Meeting. • the business, financial and other risks • general business risks – such as any
of the Merger and the Merged Group change in the New Zealand economy
The Special Meetings are to be held as set out in this Information or any regulatory changes that
as follows: Memorandum; and adversely affect the Merged Group.
PFI 3.00pm on 24 June 2013 at • your own personal circumstances. The key risks are described in more detail
Level 4 Lounge, South Stand, on pages 45 to 47.
Eden Park, Gate P5, PFI Shareholders and DPF Shareholders
Reimers Ave, Mount Eden, should refer to the Independent Expert
No Guarantee
Auckland 1024 Report included as part of this
Information Memorandum when Nothing contained in this Information
DPF 11.30am on 24 June 2013 at considering the Merger. Memorandum should be construed as a
Level 4 Lounge, South Stand, promise of profitability or of investment
Eden Park, Gate P5, PFI Shareholders should refer to the
returns in respect of PFI or DPF, and no
Reimers Ave, Mount Eden, Independent Appraisal Report included
person named in this Information
Auckland 1024 as part of this Information Memorandum
Memorandum (including PFI, DPF and
when considering the proposed changes
DPFM, nor any of their respective
How do I vote? to the PFI Management Agreement as
directors, officers or employees) or any
part of the Merger. DPF Shareholders
other person gives any guarantee or
Accompanying this Information should also consider this report for
promise as to the future performance of
Memorandum is a Voting/Proxy Form information purposes when considering
PFI or DPF of the future value or share
that you can use to vote on the Merger the Merger.
price of PFI Shares or payment of any
either by:
PFI Shareholders and DPF Shareholders distributions in relation to PFI Shares.
• attending the relevant Special Meeting; should carefully consider the benefits,
or disadvantages and risks together with
the other information contained in this
• appointing someone to vote for you at
Information Memorandum before
the Special Meeting.
deciding how to vote on the Merger.
If you are not attending the Special
If, as a PFI Shareholder, you vote against
Meeting but wish to vote, your Voting/
the Merger but the Merger proceeds, you
Proxy Form must be returned in
will continue to hold your PFI Shares and
accordance with the instructions on
those shares will be tradable on the NZX
the Voting/Proxy Form by:
Main Board.

MERGER
SNAPSHOT
Key investment themes Snapshot of PFI, DPF and the Merged Group3
• Merger of PFI and DPF, bringing
together two successful, complementary PFI DPF Merged Group
property investment companies.
Number of properties 50 33 83
• Significant increase in assets and rental
income, achieved in a cost effective Portfolio value $400m $414m $814m
manner.
Average property $8.0m $12.6m $9.8m
• Compelling growth opportunity in the value
industrial property category at an
attractive point in the property cycle. Tenants4 84 55 137
• Significant diversification within the WALT 4.8 years 6.4 years 5.6 years
Merged Group property portfolio by
rental income, lease expiry, and the Total net lettable area 297,956sqm 269,480sqm 567,436sqm
number, type and size of tenants
Occupancy by rental 98.0% 96.3% 97.1%
and buildings.
• The Merger is expected to improve the Contract rental $32.8m $31.7m $64.5m
liquidity of PFI Shares, and greatly Contract yield5 8.21% 7.65% 7.93%
improve liquidity for DPF Shareholders.
Rent review type 47.3% Market, 36.9% Market, 42.1% Market,
• The Merger is expected to be earnings
accretive to both sets of shareholders. 11.5% Fixed, 42.5% Fixed, 26.9% Fixed,
41.2% Index linked 20.6% Index linked 31.0% Index linked
• Bank facility headroom and potential
to access more diverse sources of capital Geography 88.6% Auckland, 85.2% Auckland, 86.9% Auckland,
at lower cost to support further growth 11.4% Other 14.8% Other 13.1% Other
initiatives.
Asset class mix 96.6% Industrial, 66.9% Industrial, 81.5% Industrial,
• Merged Group expected to rank 29
3.4% Office 16.8% Office, 10.2% Office,
in the NZX 50 Index (as compared to
16.3% Other 8.3% Other
PFI’s current ranking of 42).2
• One of the largest specialist industrial
property exposures of all LPV’s on the
NZX Main Board.
2
Issuers in the NZX 50 Index are ranked by free float market capitalisation. Merged Group’s expected ranking in the NZX 50 Index is calculated on a pro forma basis, assuming it is included in
the NZX 50 Index at the next quarterly review date. The information presented is based on the free float market capitalisation of NZX 50 Index issuers as at 23 April 2013, an assumed free float
market capitalisation of $509.6 million for the Merged Group and a free float market capitalisation of $1.7 billion for Mighty River Power (based on 686,400,000 shares multiplied by an offer
price of $2.50 per share). Merged Group’s assumed free float market capitalisation is based on an equity value of $273.0 million for PFI and an equity value of $236.6 million for DPF, being the
estimated values as at 28 February 2013, when PFI was trading at $1.24 per share. These conclusions are based on the PFI/DPF’s own analysis and have not been approved or checked by NZX. Refer
to the charts under the heading “Financial and Scale Benefits” in Section 2 of this Information Memorandum for further details.
3
The information in this table is as at 31 March 2013, except to the extent that such information is based on valuation information (in which case the valuation information set out under the descriptions
of the PFI and DPF property portfolios in Section 3 of this Information Memorandum was used). Merged Group information is an aggregation of the information provided for PFI and DPF.
4
PFI and DPF have two tenants in common.
5
Calculated as the contract rental divided by portfolio value.

Comparison of PFI, DPF and the Merged Group with NZX Main Board LPVs6
Portfolio value ($ million)
2500
2,076
2000
1,822
1500 1,461
$ MILLION
1,065 814 AVERAGE: $944M

1000
647 623
500 414 400
122
0
KIP GMT PCT ARG Merged DNZ VHP DPF PFI NPT
Group
• 5th largest LPV on the NZX Main Board (by market capitalisation).
Weighted averaged lease term (years)
15
12.1
12
median: 5.6yrs
9
YEARS
6.4 6.2 6.1

6 5.6 5.6 5.5 5.4 4.8
4.1
3
0
VHP DPF NPT ARG GMT Merged PCT DNZ PFI KIP
Group
• Merged Group’s WALT in line with the sector median.
6
The information presented in these charts for all LPVs, except PFI, DPF and the Merged Group, is sourced from the last financial report and NZSX filings for those LPVs filed prior to 31 March 2013.
All charts, except that chart relating to WALT, reflect movements in portfolio value in the period between the last respective financial reports and NZSX filings and 31 March 2013. Information
presented in the WALT chart is sourced from last respective financial reports and NZSX filings. The information presented for PFI and DPF is as at 31 March 2013, except to the extent that such
information is based on valuation information (in which case the valuation information set out under the descriptions of the PFI and DPF property portfolios in Section 3 of this Information
Memorandum was used). The information presented for the Merged Group is an aggregation of the information provided for PFI and DPF. The companies which the stock codes set out in the
tables relate to can be found on the NZX website at www.nzx.com.

Gearing7 (%)
50
44.8
41.2 41.0 median: 35.8%
40 39.0 38.6
33.0 33.0
32.0 30.5
30
PERCENTAGE
20.9
20
10
0
VHP DPF ARG DNZ Merged PCT PFI KIP GMT NPT
Group
• Merged Group’s gearing in line with the market.
7
Calculated as total interest bearing debt divided by portfolio value. The information presented in this table for all LPVs, except PFI, DPF and the Merged Group, is sourced from the last respective
financial reports and NZSX filings for those LPVs filed prior to 31 March 2013. The information presented for PFI, DPF and the Merged Group is based on the table “Merger Pro Forma Prospective
Consolidated Statements of Financial Position” in the Prospective Financial Information section of this Information Memorandum.

Top 10
shareholders
8
Top 10 PFI Shareholders as at 31 March 2013

Rank Holder Shares % Total register
1 FNZ Custodians Limited 16,884,086 7.7%
2 National Nominees New Zealand Limited 13,822,048 6.3%
3 Custodial Services Limited 10,278,496 4.7%
4 Investment Custodial Services Limited 9,598,788 4.4%
5 BNP Paribas Nominees (NZ) Limited 8,259,715 3.7%
6 Custodial Services Limited 4,414,275 2.0%
7 Private Nominees Limited 4,130,363 1.9%
8 Accident Compensation Corporation 4,086,005 1.9%
9 Masfen Securities Limited 4,000,905 1.8%
10 Superlife Trustee Nominees Limited 2,804,154 1.3%
Top 10 Total 78,278,835 35.7%
Top 10 DPF Shareholders as at 31 March 2013

Rank Holder Shares % Total register
1 Brendan Jon Lindsay, Jocelyn Elinor Ann Lindsay and Simon Middleton Palmer 69,436 4.5%
2 John Vincent Wildermoth, Peter Webster Wilson, Arthur William Young and John Scott Spence 49,400 3.2%
3 Simon John Bufton, Jennifer Jean Bufton and Arthur William Young 47,733 3.1%
4 Colleen Robyn Mckee, Trevor Francis Mckee and Ronald William Blackhouse 41,700 2.7%
5 Carlaw Heritage Trust Inc 33,400 2.2%
6 Heatherfield Investments Limited 31,432 2.0%
7 Arthur William Young and Allan John Wadams 29,900 1.9%
8 DPF Management Limited 27,397 1.8%
9 Rosemary Jeanette Thomas 25,901 1.7%
10 Bendor Farms Limited 25,058 1.6%
Top 10 Total 381,357 24.7%
Top 10 expected Merged Group shareholders

Rank Holder Shares % Total register DPF / PFI
1 FNZ Custodians Limited 16,884,086 4.1% PFI
2 National Nominees New Zealand Limited 13,822,048 3.4% PFI
3 Custodial Services Limited 10,278,496 2.5% PFI
4 Investment Custodial Services Limited 9,598,788 2.3% PFI
5 Brendan Jon Lindsay, Jocelyn Elinor Ann Lindsay and Simon Middleton Palmer 8,555,765 2.1% DPF
6 BNP Paribas Nominees (NZ) Limited 8,259,715 2.0% PFI
John Vincent Wildermoth, Peter Webster Wilson, Arthur William Young and
7 John Scott Spence
6,086,969 1.5% DPF
8 Simon John Bufton, Jennifer Jean Bufton and Arthur William Young 5,881,565 1.4% DPF
9 Colleen Robyn Mckee, Trevor Francis Mckee and Ronald William Blackhouse 5,138,190 1.2% DPF
10 Custodial Services Limited 4,414,275 1.1% PFI
Top 10 Total 88,919,897 21.6%
None of the shareholders listed in the tables guarantee the performance of PFI Shares.
8

SECTION
MERGER
HIGHLIGHTS
progress
TOGETHER
Chemical Freight Services, 10c Stonedon Drive, East Tamaki, Auckland MERGER HIGHLIGHTS 15
What is the
rationale for
the Merger?
The rationale for the Merger and the expected benefits of the Merger for both PFI and
DPF shareholders are set out on the following pages, together with the key reasons
why the independent directors believe you should vote in favour of the resolutions.
1
Benefits of the Merger
The boards of both PFI
and DPF believe that the Strong strategic rationale
Merger is a compelling
The directors of PFI and DPF believe
proposition for both PFI
that the Merger has a strong strategic
and DPF shareholders for
rationale and will provide the following
the following reasons:
benefits for both PFI and DPF
shareholders:
• The Merger will bring together two
successful, complementary property
investment companies.
• The Merger is consistent with key
strategic objectives of PFI of
strengthening PFI’s lease expiry profile
and leveraging PFI’s strong balance
sheet into earnings accretive industrial
property investment opportunities.
• The Merger is consistent with key
strategic objectives of DPF of reducing
portfolio vacancy, providing further
asset diversification within the portfolio
and offering DPF Shareholders the
potential for earnings accretion and
capital gains.
• The Merger will provide a compelling
growth opportunity for both sets of
shareholders in the industrial property
category at an attractive point in the
property cycle.
16 MERGER HIGHLIGHTS
PFI
2

A larger and more diverse
property portfolio
The Merged Group is expected to benefit
3 Enhanced portfolio
characteristics
Reduced tenant concentration
from enhanced scale, a more diversified by rental income
asset portfolio and enhanced portfolio • The charts on the right illustrate how
characteristics: the Merger will diversify each of PFI top 10 tenants 42.4%
• The Merger significantly increases PFI and DPF’s rent rolls (being a list of all OTHER 57.6%
and DPF’s respective property portfolios tenants and their current contracted
and contracted rental income, compared rent). Based on information as at 31
to the respective standalone values of March 2013, the Merged Group’s top
their portfolios as at 31 March 2013. 10 tenants9 will make up 33.6% of the DPF
total lease portfolio, by rent roll,
• This increase is achieved for both compared to 42.4% for PFI and 52.0%
parties in a cost effective manner that for DPF before the Merger. The
would not be ordinarily achievable reduction in tenant concentration
unless capital were raised to fund an improves the defensiveness of the
acquisition of an equivalent size. Merged Group’s revenue base.
The costs associated with raising equity
capital to complete an acquisition of
this size would likely exceed the costs
of the Merger.
• Shareholders of the Merged Group will
have exposure to a significantly larger
property portfolio, with increased
diversification of the portfolio by rental top 10 tenants 52.0%
income, lease expiry, and number, type OTHER 48.0%
and size of tenants and buildings.
• With increased scale, the Merged
Group should have an improved ability Merged Group
to retain existing tenants, attract new
tenants and leverage off existing tenant
relationships to establish new tenancies.
• The Merged Group will benefit from
a reduction in the impact of property-
specific risks on the performance of its
property portfolio, such as individual
lease expiry risk, and a reduction in
volatility of cash flows due to portfolio
diversification. This reduced risk across
the Merged Group’s portfolio comes
from a smoothed lease expiry profile
and expected reduced cash flow
volatility from less tenant concentration. top 10 tenants 33.6%
OTHER 66.4%
The top 10 tenants for PFI, DPF and Merged Group are set out on pages 29, 34 and 38 of this Information Memorandum respectively.
9
MERGER HIGHLIGHTS 17
Smoothed lease expiry profile
• As at 31 March 2013, DPF’s property • The Merger will result in a smoothing
portfolio had a WALT of 6.4 years and of the lease expiry profile of the PFI
PFI’s property portfolio had a WALT and DPF portfolios, providing a more
of 4.8 years. The WALT of the defensive rent roll.
combined property portfolio as at 31
March 2013 would have been 5.6 years,
in line with the sector median.
Lease expiry profile by contract rental10
PFI
40
32
22.0
PERCENTAGE
24
16.8 18.1
16
9.8 8.1 8.2
6.6
8
4.6
2.0 1.1 2.7
0
VACANT Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Onwards
YEAR ENDING
DPF
40
33.4
32
24
PERCENTAGE
16
12.7 11.5
9.2 9.8
5.6 7.5
8
3.7 4.8
1.2 0.6
0
YEAR ENDING
MERGED GROUP
40
32
25.7
PERCENTAGE
24
16
11.7 13.0
10.3 9.0
7.7 8.0
8 5.7 4.3
2.9 1.7
0
YEAR ENDING
10
The information presented in this chart is as at 31 March 2013.
4 Financial and scale benefits
• Assuming the Merger occurred at noted that the Merger is expected to including from equity and debt
31 December 2012: preserve the market value of DPF capital markets, as well as providing
Shareholders’ investment. improved funding terms.
− The Merger and associated treasury
initiatives would increase dividends • The Merger will bring the benefits of • The Merged Group is expected to
per share by 10.7% for PFI economies of scale, scope and business become the 5th largest LPV on the NZX
Shareholders and 4.0% for DPF synergies (including procurement Main Board, with an implied market
Shareholders (assuming DPF benefits) from combining two capitalisation of approximately $510
became a listed PIE on 31 December complementary businesses. million13 and net assets of approximately
2012), following the completion of $487 million14. A benefit of having a
• Operating efficiencies gained from
the Merger11. larger market capitalisation is that the
the management of a substantially
Merged Group will obtain a greater
− The Merger would increase net larger asset portfolio by the Manager
weighting in market indices such as the
tangible asset (NTA) value per share should enhance earnings of the
NZX 50 Gross Index and NZX Property
by 1.2% for PFI Shareholders12. Merged Group.
Index, and also an increased profile for
− Although the Merger would slightly • Increased scale may also improve investors locally and internationally.
reduce NTA value per share by 4.1% the access of the Merged Group to
for DPF Shareholders, Deloitte has more diversified sources of funding,
NZX50 Index (#20 - #49)

The Merged Group is expected to rank 29 in the NZX 50 Index (as compared to PFI’s current ranking of 42).15
900
800
FREE FLOAT MARKET CAP ($ MILLION)
700 AFTER
600 MERGER
#29
500
BEFORE
400 MERGER
300 #42
200
100
0
KMD
HNZ
PFI
RBD
AMP
DIL
EBO
Merged
Group
DNZ
AIR
SUM
TPW
OGC
WHS
NZX
VHP
NZO
ATM
MET
SKL
HLG
MHI
TWR
STU
ANZ
ARG
VCT
FSF
FRE
GPG
NPX
11
A PFI Shareholder with $100,000 invested is expected to receive a cash dividend of $5,329 in respect of the 2013 calendar year if the Merger does not proceed, compared to a cash dividend of $5,901
(an increase of 10.7%) if the Merger had completed on 31 December 2012. A DPF Shareholder with $100,000 invested is expected to receive a cash dividend of $5,674 in respect of the 2013 calendar
year if the Merger does not proceed (assuming DPF became a listed PIE on 31 December 2012), compared to a cash dividend of $5,901 (an increase of 4.0%) if the Merger had completed on
31 December 2012. Further information is set out in the “Merger Pro Forma Prospective Financial Information” section in the Prospective Financial Information section of this Information Memorandum.
12
Based on the “Merger Pro Forma Prospective Consolidated Statements of Financial Position” in the Prospective Financial Information section of this Information Memorandum, assuming the
Merger occurred on 31 December 2012.
13
Based on an equity value of $273.0 million for PFI and an equity value of $236.6 million for DPF, being the estimated values as at 28 February 2013, when PFI was trading at $1.24 per share.
14
Based on a net asset value of $256.6 million for PFI and a net asset value of $230.0 million for DPF (both rounded to 1 decimal place), as calculated on 28 February 2013.
15
Issuers in the NZX 50 Index are ranked by free float market capitalisation. Merged Group’s expected ranking in the NZX 50 Index is calculated on a pro forma basis, assuming it is included in the
NZX 50 Index at the next quarterly review date. The information presented is based on the free float market capitalisation of NZX 50 Index issuers as at 23 April 2013, an assumed free float
market capitalisation of $509.6 million for the Merged Group and a free float market capitalisation of $1.7 billion for Mighty River Power (based on 686,400,000 shares multiplied by an offer
price of $2.50 per share). Merged Group’s assumed free float market capitalisation is based on an equity value of $273.0 million for PFI and an equity value of $236.6 million for DPF, being the
estimated values as at 28 February 2013, when PFI was trading at $1.24 per share. These conclusions are based on the PFI/DPF’s own analysis and have not been approved or checked by NZX.
Refer to the charts under the heading “Financial and Scale Benefits” in Section 2 of this Information Memorandum for further details. The companies stock codes can be found on the NZX website
at www.nzx.com
MERGER HIGHLIGHTS 19
Property Index16
1200 • A larger shareholder base is likely to

increase the frequency and volume
FREE FLOAT MARKET CAP ($ MILLION)
of trading in PFI Shares.

• The Merged Group’s enlarged capital
800 base and access to more diverse sources
AFTER of capital will also provide a platform
MERGER for future growth.
#5 BEFORE
MERGER
400
#7
0
KIP GMT PCT ARG Merged DNZ VHP PFI NPT
Group
Independent expert opinion buy-out, which has an associated • there is a reasonable basis for the
cost reflected in higher debt levels); Merger ratio, and the benefits of the
In opining that the Merger has merits, Merger are shared fairly between the
the Independent Expert, Deloitte, − after removing the impact of the
shareholder groups.
concluded in the Independent Expert DPF swaps buy-out, and other
Report that: normalisation adjustments, the The Independent Expert also
Merger is expected to be broadly concluded that the management fee
• “the Merger provides a number of earnings neutral for both shareholder changes that DPF Shareholders will
portfolio or operational benefits to both groups (on average over time); and experience if the Merger proceeds
sets of shareholders, such as smoothing are fair.
out the lease expiry profile, and reducing − while the NTA and earnings
the percentage exposure to individual outcomes for DPF shareholders The conclusions of Deloitte’s report
tenants and properties; would have been approximately should be read in the context of the
2.5% better but for the 5% tilt in the full Independent Expert Report. A copy
• the Merger is expected to improve the Merger ratio in favour of PFI, we of the report is included as part of this
liquidity of PFI shares, greatly improve believe this is a reasonable trade-off Information Memorandum.
liquidity for DPF shareholders, and for the materially greater liquidity
potentially improve PFI’s access to, and they will likely achieve in the
reduce the cost of, capital;
What are the risks?
Merger (and a share of the other
Merger benefits). The benefits of the Merger outlined
• there are no material negative financial
in this section should be read in the
impacts for either shareholder group: • the recent increase in PFI’s share price context of the risks associated with the
− while the Merger dilutes DPF does not, in our view, invalidate the Merger. The key risks associated with
shareholders’ net tangible assets Merger ratio or our analysis of the the Merger are described on pages 45 to
(“NTA”), it is expected to preserve financial impacts of the Merger, because 47 of this Information Memorandum.
the market value of DPF the underlying value of DPF’s shares
shareholders’ investment; is likely to have increased in a similar
manner;
− the combination of the Merger
and the buy-out of DPF’s swaps • there do not appear to be any viable
is earnings accretive for both alternatives for either shareholder group
shareholder groups (although most that are likely to be superior to the
of the accretion is due to the swaps Merger; and
16
The companies stock codes can be found on the NXZ website at www.nzx.com
SECTION
OVERVIEW OF
THE MERGER
strategically
TOGETHER
Fletcher Building Products, 30-32 Bowden Road, Mount Wellington, Auckland OVERVIEW OF THE MERGER 21
Background
to the Merger
On 15 April 2013, PFI and DPF announced a proposal to merge.

• PFI will take and assume all the
The proposed merger will be effected What happens under the Merger? property, rights, powers and privileges,
by way of a Court approved scheme of
PFI and DPF are seeking to merge liabilities and obligations of DPF;
arrangement pursuant to Part 15 of the
Companies Act. pursuant to a Court approved scheme • PFI will continue as the amalgamated
of arrangement under which: company with the name “Property For
In order for the Merger to proceed, PFI
• PFI and DPF will merge (by way Industry Limited” and continue to be
and DPF must each obtain shareholder
of an amalgamation); managed by the current Manager,
approval by way of a special resolution
PFIM, under the terms of the PFI
passed by 75% or more of each group of • DPF Shareholders will receive 123.21817 Management Agreement (as amended
shareholders entitled to vote and voting PFI Shares for every DPF Share they as part of the Merger) (refer to Section
on the matter. In addition, the proposed hold, with those DPF Shares being 4 of this Information Memorandum
changes to the PFI Management cancelled. On Merger, former DPF for details about the PFI Management
Agreement and an increase to director Shareholders will hold 46.4% of the Agreement); and
fees must be approved by ordinary shares in the Merged Group (PFI, as
resolution of PFI Shareholders. the continuing entity); • PFI Shares will continue to be quoted
on the NZX Main Board under the
If shareholder approval is obtained, • PFI Shareholders will retain their ticker “PFI”.
the Merger is intended to be effected existing PFI Shares, but will be diluted
on 1 July 2013. as a result of the PFI Shares issued to Further information about the terms and
DPF Shareholders under the Merger. conditions of the Merger is set out in the
On Merger, the former PFI Scheme Plan in Section 8 of this
Shareholders will hold 53.6% of Information Memorandum.
the Merged Group (PFI, as the On Merger, the Merged Group will
continuing entity); become one of the largest specialist
listed industrial property investors in
New Zealand.18
Rounded to 3 decimal places. Refer to the description of the exchange ratio under the heading “Exchange ratio” on page 23.
17
Based on the estimated values of industrial property for LPVs, PFI, DPF and the Merged Group.
18
22 OVERVIEW OF THE MERGER

Final Merger structure
Pre-merger Post-merger
includes subsidiary: includes subsidiary: includes subsidiaries:

pfi property direct property fund pfi property no.1 limited
no.1 limited No.1 limited and direct property fund
No.1 limited
What does the Merger mean for you? The directors of PFI and DPF consider In addition, on or before 28 June 2013,
that the exchange ratio treats their DPF will pay a dividend in respect of the
Exchange ratio respective shareholders fairly and provides financial quarter ending 30 June 2013.
Following extensive due diligence and them with fair value for their shares. This dividend will otherwise reflect
negotiations, the boards of PFI and DPF DPF’s usual dividend policy.
agreed an exchange ratio under which PFI and DPF shareholders should read
DPF Shareholders will receive the description of the exchange ratio set DPF Shareholders on the register as
123.2180084 PFI Shares for every out in Section 5.8 of the Independent at 12.01am on the effective date of the
DPF Share that they hold. Fractional Expert Report. Merger (expected to be 1 July 2013) will
entitlements to new PFI Shares will be issued an aggregate of 191,091,663
PFI Shareholders new shares in PFI. Based on there being
be rounded down to the nearest whole
number. If, following application of the Under the Merger, PFI Shareholders 1,550,842 DPF Shares outstanding, this
entitlement ratio and rounding, some of will retain their existing PFI Shares, reflects an exchange ratio of 123.21819
the 191,091,663 PFI Shares to be issued and together will hold 53.6% of the shares PFI Shares for every DPF Share.
to the DPF Shareholders would not be in the Merged Group on completion of
For example, a DPF Shareholder who
allotted, those DPF Shareholders whose the Merger.
holds 1,000 DPF Shares on the Merger
entitlements prior to rounding were In addition, on or about 28 June 2013, Date will receive 123,218 new PFI Shares
closest to the nearest whole share will be PFI will pay a dividend in respect of the (subject to rounding)20.
allotted one additional PFI Share until financial quarter ending 30 June 2013.
191,091,663 PFI Shares are allotted. This dividend will be paid to PFI When will you receive your
The exchange ratio reflects agreed Shareholders who are recorded on the PFI Shares?
relative values for each of PFI and DPF, PFI Share register on 19 June 2013
and will otherwise reflect PFI’s usual If the Merger proceeds:
being 109% of the adjusted net tangible
asset value for PFI and 104% of the dividend policy.
• PFI Shares are expected to be allotted
adjusted net tangible asset value for DPF to DPF Shareholders on or about
DPF Shareholders
as at 28 February 2013. It was arrived at 1 July 2013.
after considering a number of factors Under the Merger, DPF Shareholders will
including historical trading multiples for receive PFI Shares in exchange for their • Existing PFI Shareholders will continue
each entity, the historic earnings profiles existing DPF Shares, with those DPF to retain their existing PFI Shares.
of each entity, the portfolio characteristics Shares being cancelled, and together will
of each entity, the costs associated with hold 46.4% of the PFI Shares in the Merged
PFI raising capital to buy DPF’s assets, Group on completion of the Merger.
the costs of DPF listing independently DPF Shareholders will not be required to
and indexation and liquidity benefits for apply, pay or send any money, for the new
both PFI and DPF. PFI Shares to be allotted to them under
the Merger.
Rounded to 3 decimal places. Refer to the description of the exchange ratio under the heading “Exchange ratio” on this page.
19
Refer to the description of the exchange ratio under the heading “Exchange ratio” on this page.
20
OVERVIEW OF THE MERGER 23

Profile
of PFI
Background
PFI was formed in 1993 as a specialist investor in high quality industrial

property assets throughout New Zealand. PFI aims to provide shareholders
with an attractive and reliable income stream.
Proactive portfolio management and • invest in multi-purpose, industrial Portfolio investment entity status
PFI’s capital project and acquisition properties that are occupied by a PFI is a “listed PIE” for tax purposes
programmes aim to deliver income and balanced spread of tenants; and is subject to the company tax rate
capital growth to PFI’s shareholders in of 28%. PFI should remain a listed PIE
• invest in properties that display strong
the long term. throughout the Merger process.
income and/or capital appreciation
In 1994, PFI made an initial public attributes. These will include properties A summary of the taxation treatment
offering of 50 million shares at $1.00 per that are located in land constrained of a listed PIE is set out in Section 4
share and subsequently listed on the NZX areas and close to important transport of this Information Memorandum under
Main Board. Since listing, PFI has seen links; and the heading “Taxation implications of
its market capitalisation grow from $50 the Merger”.
• provide a risk-averse approach to
million 21 to approximately $295 million
acquisitions, asset management and
as at 24 April 2013. Property portfolio
capital management consistent with
Investment strategy delivering the target increase in PFI’s property portfolio, summarised
shareholder wealth and distributing below, consists of 50 properties valued
PFI’s investment strategy is to: at $400 million 22 in aggregate. As at 31
100% operating profit.
• invest in quality industrial property in March 2013, the portfolio WALT for PFI
New Zealand’s main urban centres; was 4.8 years, and the yield on contracted
rental income for the portfolio was 8.21%23.
Contract Valuation Yield on % of portfolio

Name Key Tenant Rental ($) ($) Contract value
17 Allens Road Harvey Norman Leasing 962,188 11,200,000 8.6% 2.80%
Caroma Industries
W&R Jack
47 Arrenway Drive Onyx Group 219,800 3,000,000 7.3% 0.75%
30-32 Bowden Road Norak Properties 1,297,276 15,000,000 8.6% 3.75%

Fletcher Building Products
8A & 8B Canada Crescent Polarcold Stores 1,080,000 11,875,000 9.1% 2.97%
50 Carbine Road Atlas Copco 190,000 2,425,000 7.8% 0.61%
54 Carbine Road & Pharmacy Retailing 1,172,641 16,175,000 7.2% 4.05%

6a Donnor Place Glengarry Hancocks
Vacant
76 Carbine Road Wesfarmers Industrial & Safety 420,000 5,400,000 7.8% 1.35%
Atlas Gentech
21
PFI issued 50 million shares for $1.00 per share when it listed on the NZSX in 1994.
22
As at 31 December 2012, based on valuations from the Valuers (other than for 15 Copsey Place, which is a valuation determined by the PFI directors). Details of those valuations and the Valuers
are set out in Section 7 of this Information Memorandum.
23
Calculated as current contracted rental, divided by the capital value of investment properties as at 31 March 2013, as reflected in the table.

7 Carmont Place Packsys 535,000 6,750,000 7.9% 1.69%
CMI
85 Cavendish Drive Greenmark Wholesaler 807,884 9,450,000 8.5% 2.36%

Reece
Big Save Furniture
212 Cavendish Drive Toll Logistics 1,208,624 14,200,000 8.5% 3.55%

New Zealand Wine Cellars
15 Copsey Place24 Barkers Clothing 407,360 7,550,000 5.4% 1.89%

Canterbury
Vacant
6 Donnor Place Wickliffe NZ 1,296,167 16,200,000 8.0% 4.05%
8 Hugo Johnston Drive Kings Transport & Logistics 632,841 7,600,000 8.3% 1.90%
Tenix
YSM Corp Co
Argyle Schoolwear
Jin Hui Ou & Bi Ou Yang
12 Hugo Johnston Drive Bowls NZ 329,755 3,700,000 8.9% 0.93%

Ricoh New Zealand
Hallmark Cards
16 Hugo Johnston Drive Modempak 346,615 4,150,000 8.4% 1.04%

Encap Group
102 Mays Road Carter Holt Harvey 404,400 4,840,000 8.4% 1.21%
44 Mandeville Street Windflow Technology 978,918 11,050,000 8.9% 2.76%

Fletcher Distribution
Tyco Flow Control Pacific
Leech & Partners
LFA
174b Marua Road Transpacific Industries 136,440 2,045,000 6.7% 0.51%
8 McCormack Place Information Management Group 819,826 8,900,000 9.2% 2.23%
4-6 Mt Richmond Road Brambles 797,965 9,450,000 8.4% 2.36%
509 Mt Wellington Highway Fletcher Distribution 931,026 11,500,000 8.1% 2.88%

Cafe Greco
Duluxgroup
Tileco
Vacant
15 Copsey Place is currently an investment property under development and is due to be completed in October 2013. The valuation shown in the table is as if the development currently underway
24
is complete. It is based on as if complete valuation advice from Colliers International New Zealand Limited and reflects costs to complete the development of $1,122,416 and a valuation increase
on completion of $831,251.

511 Mt Wellington Highway Bremca Industries 408,088 5,420,000 7.5% 1.36%
515 Mt Wellington Highway Stryker 253,490 3,210,000 7.9% 0.80%
523 Mt Wellington Highway BGH Group 213,741 2,990,000 7.1% 0.75%
36 Neales Road Mainfreight 1,081,841 12,650,000 8.6% 3.16%
9 Nesdale Avenue Brambles 605,000 6,860,000 8.8% 1.72%
1 Niall Burgess Road R L Button & Co 216,466 2,800,000 7.7% 0.70%
2-6 Niall Burgess Road New Zealand Window Shades 802,222 8,200,000 9.8% 2.05%
3-5 Niall Burgess Road Electrolux 1,006,654 13,300,000 7.6% 3.33%
7-9 Niall Burgess Road DHL Supply Chain 2,004,077 22,700,000 8.8% 5.68%
10 Niall Burgess Road Outside Broadcasting 230,500 3,025,000 7.6% 0.76%
19 Omega Street New Zealand Automobile Association 174,241 2,250,000 7.7% 0.56%

Just Switchboards
50 Parkside Road Transpacific Industries 334,740 3,600,000 9.3% 0.90%

Vacant
58 Richard Pearse Drive Pharmacy Retailing 957,833 12,240,000 7.8% 3.06%
320 Rosebank Road Te Ngahere 649,372 7,500,000 8.7% 1.88%

Doyle Sails
326 Rosebank Road Te Ngahere 82,501 1,060,000 7.8% 0.27%
686 Rosebank Road Roadshow Entertainment 2,394,919 27,900,000 8.6% 6.98%

Multiflora Laboratories
Universal Specialities
AA Insurance
NZ Racing Laboratory Services
Akzo Nobel Coatings
New Zealand Comfort
322 Rosedale Road Imake 887,346 11,400,000 7.8% 2.85%

Parkland Products
Home Transfer Centre
61-69 Patiki Road JB Trading 982,499 12,250,000 8.0% 3.06%

Embroidrey Works
Dorma
Gunnersen
Bidvest
Vacant
1 Ron Driver Place Stewart Scott Cabinetry 393,819 5,235,000 7.5% 1.31%

48 Seaview Road BP Oil 542,530 6,400,000 8.5% 1.60%
Bridgestone
Goughs Gough & Hamer
Multispares
170 Swanson Road Transportation Auckland 924,261 12,400,000 7.5% 3.10%
5 Vestey Drive PPG Industries 215,000 2,585,000 8.3% 0.65%
7 Vestey Drive Wickliffe 460,000 6,020,000 7.6% 1.51%
9 Vestey Drive Multispares 192,861 2,705,000 7.1% 0.68%
11 Vestey Drive ASB Bank 491,727 5,940,000 8.3% 1.49%
15a Vestey Drive Skills For Work 532,554 6,180,000 8.6% 1.55%
PMP Maxum
36 Vestey Drive Fox Air NZ 132,500 1,850,000 7.2% 0.46%
127 Waterloo Road DHL Supply Chain 276,959 3,550,000 7.8% 0.89%
41 William Pickering Drive Meridian Energy 405,385 5,050,000 8.0% 1.25%

So-Pac Marine
Mayo Hardware
Total $32,827,852 $399,730,000 8.21% 100.0%
PFI’s property portfolio as at 31 March 2013 is further summarised below:
Property type by valuation
INDUSTRIAL 96.6%
OFFICE 3.4%

Rent review type by rental income
MARKET 47.3%
INDEX LINKED 41.2%
FIXED 11.5%
Tenant spread by rental income
Transport & storage 25.9%

Machinery & Equipment Manufacturing 18.2%
Construction 13.8%
Other manufacturing 12.8%
Property & Business Services 9.7%
Wood & paper manufacturing 7.5%
Food manufacturing 5.0%
Textiles & clothing 2.6%
Health & community services 2.0%
Vacant 2.0%
Accommodation & restaurants 0.5%
Geographic location by valuation
AUCKLAND 88.6%
CHRISTCHURCH 6.7%
WELLINGTON 4.7%

Top ten tenants by rental income
Rank Top 10 No. of Properties Rent PA ($) % of rental income
1 DHL Supply Chain 2 2,281,036 6.81%
2 Fletcher Building 3 2,219,520 6.62%
3 Wickliffe 2 1,756,167 5.24%
4 Pharmacy Retailing 2 1,624,083 4.85%
5 Brambles 2 1,402,965 4.19%
6 Mainfreight 1 1,081,841 3.23%
7 Polarcold Stores 1 1,080,000 3.22%
8 Electrolux 1 1,006,654 3.00%
9 Transportation Auckland 1 924,261 2.76%
10 New Zealand Comfort 1 828,804 2.47%
Total 16 $14,205,331 42.39%
Ownership Management of the Merged Group

PFI is listed on the NZX Main Board. following the Merger will continue to be
As at 31 March 2013, PFI had undertaken by PFIM pursuant to the PFI
approximately 4,800 shareholders, Management Agreement, as amended as
with the top 10 shareholders, which part of the Merger. The PFI Management
include a number of custodial and Agreement, and the amendment to be
nominee shareholders, holding made as part of the Merger, are described
approximately 35.5%. in more detail in Section 4 of this
Information Memorandum and in
Management of PFI the Independent Appraisal Report.
PFI is managed by PFIM, a private
company owned by interests associated
with McDougall Reidy & Co Limited.
PFIM took over the PFI Management
Agreement on 20 January 2012, by way
of assignment from AMP Capital
Investors (New Zealand) Limited.
PFIM has appointed McDougall Reidy
& Co Limited as its subcontractor to
provide the property and administrative
management services required under the
PFI Management Agreement.

Profile
of DPF
Background
DPF is an unlisted property fund formed late in 2003 to invest in the commercial
property sector, with a focus on industrial property.
It is a limited liability company designed • intensively managing the assets and Under the Merger, DPF Shareholders
and managed to represent as close a capital to provide investors with a blend will be issued PFI Shares and their DPF
surrogate to direct property ownership as of cash distributions and capital growth. Shares will be cancelled. DPF will cease
possible, with its performance directly to be a multi-rate PIE. Refer to Section 4
linked to the performance of the Portfolio investment entity status of this Information Memorandum under
properties that it owns. DPF is at present an unlisted multi-rate the heading “Taxation implications of
PIE. As a multi-rate PIE, DPF attributes the Merger” for a summary of the tax
Investment strategy all its taxable income between its implications of holding shares in a
DPF’s investment strategy involves shareholders based on the number of listed PIE.
seeking to enhance distributable profit shares held by them. DPF pays tax on
and the net asset value per share for the taxable income allocated to each Property portfolio
shareholders by: shareholder at the shareholder’s DPF’s property portfolio, summarised
nominated Prescribed Investor Rate below, consists of 33 properties valued at
• investing in quality commercial
(PIR) on a quarterly basis to the Inland $414 million 25 in aggregate. As at 31
property in New Zealand’s main urban
Revenue. Shareholders will generally have March 2013, the portfolio WALT for
centres;
no further tax liability in respect of their DPF was 6.4 years, and the yield on
• acquiring assets and investing in capital investment, provided they elect the contracted rental income for the portfolio
projects that are value accretive; correct PIR. was 7.65% 26.
• considering the sale of selected assets
to recycle capital into higher quality
commercial properties; and

2-4 Argus Place Yakka 395,260 4,600,000 8.6% 1.11%
51 Arrenway Drive Pacific Hygiene 445,509 4,900,000 9.1% 1.18%
5 Cable Street Cato Partners 578,565 7,100,000 8.1% 1.71%

DB Breweries
Willis Bond
Shed 22, 23 Cable Street Lion Liquor Property 856,851 11,800,000 7.3% 2.85%
Wellington Brewing
122 Captain Springs Road New Zealand Crane 495,625 5,750,000 8.6% 1.39%
Carlaw Commercial Precinct Carlaw Commercial 4,190,165 53,700,000 7.8% 12.96%

Department of Conservation
Dimension Data
Lollipops Educare
Nestle
New Zealand Institute of Chartered
Accountants
Sinclair Knight Merz
25
As at 31 March 2013, based on valuations from the Valuers, other than for 124b Hewlett Road which is a valuation determined by the DPF directors. Details of those valuations and the Valuers
are set out in Section 7 of this Information Memorandum.
26
Calculated as current contracted rental, divided by the capital value of investment properties as at 31 March 2013 as reflected in the table.

Carlaw Gateway Precinct Covo Bistrot 2,584,913 35,000,000 7.4% 8.44%
Department of Conservation
Dimension Data
Forever Trading
Hayden & Rollett Property Fund
Lollipops Educare
Management Consultants International
Mantra Day Spa
Nestle
New Zealand Institute of Chartered
Accountants
Quest
Sinclair Knight Merz
Stanley Street
Sushi Tomi
Wilson Parking
43 Cryers Road Astron Plastics 675,296 8,400,000 8.0% 2.03%
229 Dairy Flat Highway Albany Village Bakery 1,724,838 20,500,000 8.4% 4.95%
Auckland Council
Japanese Haru Cuisine
Massey University
Quest
47 Dalgety Drive Peter Hay Kitchens 435,000 9,950,000 4.4% 2.40%
59 Dalgety Drive Goodman Fielder 1,172,264 14,400,000 8.1% 3.47%
6-8 Greenmount Drive Bridon 591,132 7,250,000 8.2% 1.75%
92-98 Harris Road Goodman Fielder 1,132,747 13,800,000 8.2% 3.33%
124 Hewletts Road Carter Holt Harvey 906,103 11,300,000 8.0% 2.73%
124a Hewletts Road SCA Hygiene 1,000,000 11,800,000 8.5% 2.85%
124b Hewletts Road 27 Ballance Agri-Nutrients 840,800 11,550,000 7.3% 2.79%
3 Hocking Street Trayco Manufacturing 113,590 1,870,000 6.1% 0.45%
15 Jomac Place Southern Spars Holdings 1,438,038 18,500,000 7.8% 4.46%
1 Mayo Road Transdiesel 476,443 5,720,000 8.3% 1.38%
9 Narek Place AF Logistics 176,000 3,750,000 4.7% 0.90%

Cool Distribution Waikato / BOP
Vacant
124b Hewletts Road is currently an investment property under development and is due to be completed in June 2013. The valuation shown in the table is as if the development currently underway
27
is complete. It is based on as if complete valuation advice from Colliers International New Zealand Limited and reflects costs to complete the development of $3,827,221 and a valuation
increase on completion of $2,124,054.

306 Neilson Street Fletcher CSP Pacific 686,250 8,100,000 8.5% 1.95%
312 Neilson Street Bakery Equipment 276,717 3,575,000 7.7% 0.86%

Total Property Worxs
Transport Trailer Services
314 Neilson Street Norfolk Mechanical & Electrical 444,750 5,800,000 7.7% 1.40%
Wakefield Metals
15 Omega Street Yakka Apparel Solutions 540,454 7,000,000 7.7% 1.69%
2 Pacific Rise Hewlett-Packard New Zealand 814,284 9,000,000 9.0% 2.17%
18 Ron Driver Place Lion - Beer, Spirits & Wine 511,605 17,300,000 3.0% 4.17%
Vacant
12 Southpark Place Portavin 445,500 5,000,000 8.9% 1.21%
78 Springs Road Fisher & Paykel Appliances 5,076,669 61,500,000 8.3% 14.84%
10c Stonedon Drive Chemical Freight Services 800,242 10,200,000 7.8% 2.46%
558 Te Rapa Road DEC 438,214 5,750,000 7.6% 1.39%
12 Zelanian Drive Central Joinery 546,790 7,550,000 7.2% 1.82%
23 Zelanian Drive Exclusive Tyre Distributors 325,000 4,570,000 7.1% 1.10%
27 Zelanian Drive Goode Industries 587,391 7,500,000 7.8% 1.81%
Total $31,723,005 $414,485,000 7.65% 100.00%
DPF’s property portfolio as at 31 March 2013 is further summarised below:
industrial 66.9%
office 16.8%
other 16.3%

Fixed 42.5%
Market 36.9%
index linked 20.6%

Vacant 3.7%
education 2.7%
Construction 2.3%
government 1.9%
Auckland 85.2%
MT MAUNGANUI 8.8%
Wellington 4.6%
HAMILTON 1.4%
1 Fisher & Paykel Appliances 1 5,076,669 15.41%
2 Goodman Fielder 2 2,305,011 7.00%
3 Sinclair Knight Merz 1 2,228,927 6.76%
4 Southern Spars 1 1,438,038 4.36%
5 Nestle 1 1,190,922 3.61%
6 Lion Liquor Property Division 2 1,153,559 3.50%
7 SCA Hygiene 1 1,000,000 3.03%
8 Yakka 2 935,714 2.84%
9 Carter Holt Harvey 1 906,103 2.75%
10 Massey University 1 883,458 2.68%
Total 13 $17,118,401 51.94%
Ownership Certain shareholders of DPFM also Management of DPF

DPF is a widely held unlisted limited individually own a total of approximately DPF is managed by DPFM, a private
liability company. As at 31 March 2013, 4.9% of DPF and will therefore own company owned by interests associated
DPF had 503 shareholders, with the top approximately 2.3% of the Merged Group with McDougall Reidy & Co Limited.
10 shareholders holding approximately following implementation of the Merger. DPFM has appointed McDougall Reidy
24.6% and DPF’s largest shareholder The PFI and DPF directors consider & Co Limited as its subcontractor to
holding approximately 4.5% of the that DPFM’s shareholding in the Merged provide the property and administrative
DPF Shares. Group will help align its interests with the management services required under
interests of PFI Shareholders. DPFM the DPF Management Agreement.
DPFM (the parent company of PFIM)
currently owns approximately 1.8% of and the shareholders of DPFM do not Management of the Merged Group
DPF and will therefore own approximately guarantee the performance of PFI Shares. following the Merger will be undertaken
0.8% of the Merged Group following by PFIM pursuant to the PFI Management
implementation of the Merger. Gregory Agreement, as amended as part of
Reidy (the Managing Director of the Merger. The PFI Management
both PFIM and DPFM) has a 25% Agreement, as amended as part of
shareholding in DPFM. Mr Reidy is also the Merger, is described in more detail
the management representative director in Section 4 of this Information
on both the PFI and DPF boards of Memorandum and in the Independent
directors. See page 51 for Mr Reidy’s Appraisal Report.
biographical details.

SECTION
PROFILE OF THE
MERGED GROUP
BUSINESS
actively
TOGETHER
Central Joinery, 12 Zelanian Drive, East Tamaki, Auckland PROFILE OF THE MERGED GROUP BUSINESS 35
Business strategy
of the Merged Group
The commercial and industrial property market recovery witnessed in 2012

and during 2013 is expected to continue for the remainder of 2013.
The low interest rate environment also • consider the acquisition of quality Hamilton, Mount Maunganui,
continues to stimulate the industrial industrial property in the main centres; Wellington and Christchurch markets,
property investment market, with a flow the Merged Group will be well positioned
• consider the sale of selected assets to
of investment funds from both investors to take advantage of increased leasing
recycle capital into higher quality
and owner occupiers chasing a limited and investment activity as the industrial
industrial properties in New Zealand’s
supply of assets, particularly prime stock. property sector continues to improve.
main urban centres; and
Yields for prime commercial property, While the Merged Group will own
• consider the development of existing
and particularly industrial property, industrial and other types of commercial
expansion land and repositioning of
continue to firm as more optimism is property, the core strategic focus will
properties as tenant demand dictates.
evident in the wider market. be on industrial property.
Both PFI and DPF’s leasing and capital
These factors continue to support the
attractiveness of the industrial property
transaction activities in 2012 have Property portfolio
provided a solid foundation from which to of the Merged Group
sector.
build future earnings growth for the
Against this backdrop, the strategy for Merged Group. The Merged Group’s property portfolio
the Merged Group will be to: as at 31 March 2013 (if the Merger
With the Merged Group’s increased scale had occurred by that time) is
• continue to focus on managing the and portfolio diversification across the summarised below:
vacancy and upcoming lease expiries major industrial precincts in Auckland
in the enlarged portfolio; (87%) coupled with exposure to the
industrial 81.5%
office 10.2%
other 8.3%
36 PROFILE OF THE MERGED GROUP BUSINESS

Market 42.1%
index linked 31.0%
Fixed 26.9%

Construction 8.1%
Vacant 2.9%
education 1.3%
government 0.9%
Auckland 86.9%
Wellington 4.6%
MT MAUNGANUI 4.5%
christchurch 3.3%
HAMILTON 0.7%
PROFILE OF THE MERGED GROUP BUSINESS 37
1 Fisher & Paykel Appliances 1 5,076,669 7.64%
2 Fletcher Building 4 2,905,770 4.37%
3 Goodman Fielder 2 2,305,011 3.47%
4 DHL Supply Chain 2 2,281,036 3.43%
5 Sinclair Knight Merz 1 2,228,927 3.35%
6 Wickliffe 2 1,756,167 2.64%
7 Pharmacy Retailing 2 1,624,083 2.44%
8 Southern Spars Holdings 1 1,438,038 2.16%
9 Brambles 2 1,402,965 2.11%
10 Carter Holt Harvey 2 1,310,503 1.97%
Total 19 $22,329,169 33.58%
Financial performance Summary Pro Forma FY13 financial performance

following the Merger
The tables on the right set out a summary Merged Merged
of the Pro Forma FY13 financial PFI DPF28 Adjustments Group
performance and distributable profit per
Operating revenue $31.6m $32.1m - $63.7m
share, which has been prepared to enable
comparison of the standalone, prospective Operating expenses ($12.4m) ($15.7m) $2.9m ($25.2m)
financial information for each of PFI
and DPF, for the 12 months ending Non-operating $5.8m $7.0m ($4.4m) $8.4m
31 December 2013, with the prospective income and
financial information of the Merged expenses
Group. To enable this comparison it
Taxation ($2.5m) ($4.2m) $0.4m ($6.3m)
assumes that the Merger occurred on
31 December 2012. The Merged Group Profit/(loss)
information therefore includes 12 months $22.5m $19.2m ($1.1m) $40.6m
for the year
of trading for both PFI and DPF.
Further information on the Pro Forma
FY13 of PFI, DPF and the Merged Summary Pro Forma FY13 distributable profit 29 per share
Group as set out in the table on the right
can be found in the Prospective Financial Merged Merged
Information section of this Information PFI DPF30 Adjustments Group
Memorandum.
Distributable profit $14.5m $13.4m $2.1m $30.0m
Shares on issue 220,410,728 191,091,663 411,502,391
Distributable profit
6.60 7.03 7.31
(cents per share)
28
To enable valid comparison, it is assumed that DPF is taxed as if it were a listed PIE, rather than a multi-rate PIE as it currently is.
29
Distributable profit is non-GAAP financial information and is calculated in the table under the heading “Merger Pro Forma Prospective Distributable Profit Per Share Calculations” in the Prospective
Financial Information section of this Information Memorandum.
30
To enable valid comparison, it is assumed that DPF is taxed as if it were a listed PIE, rather than a multi-rate PIE as it currently is. DPF Shares rebased for the exchange ratio for the
purposes of comparison.

Dividend policy of Summary Pro Forma FY13 financial position
the Merged Group
The current dividend policy of both PFI Merged Merged
and DPF is to distribute 100% of profit PFI DPF31 Adjustments Group
(as determined in accordance with IFRS
Bank $0.1m - - $0.1m
for the period), adjusting for additional
revenue booked as a result of fixed rent Investment properties $396.4m $415.7m - $812.1m
review accounting entries, unrealised
changes in the values of investment Goodwill - - $9.8m $9.8m
properties, realised gains or losses
on disposal of investment properties Other assets $8.6m $5.0m ($0.3m) $13.3m
(net of tax on depreciation claw-back),
Total assets $405.1m $420.7m $9.5m $835.3m
unrealised changes in the values of
derivative financial instruments and Borrowings $133.1m $173.3m $11.8m $318.2m
deferred tax and other one off items.
Other liabilities $14.4m $11.7m ($5.5m) $20.6m
The payment and amount of any future
distributions will be at the discretion of Total liabilities $147.5m $185.0m $6.3m $338.8m
the board of the Merged Group after
taking into account the factors the board Net assets $257.6m $235.7m $3.2m $496.5m
deems relevant at the time. Those factors
Net tangible assets $257.6m $235.7m ($6.6m) $486.7m
may include the Merged Group’s financial
conditions, operating results, current and Shares on issue 220,410,728 191,091,663 411,502,391
anticipated cash needs and debt
covenants. NTA per share $1.17 $1.23 $1.18
The board of the Merged Group will Loan-to-value ratio32 33.0% 41.2% 38.6%
continue to assess whether to operate or
suspend a dividend reinvestment scheme
on a quarter-by-quarter basis, as the Balance Sheet and The Merged Group will monitor capital
Capital Management on the basis of a loan-to-value ratio.
Merged Group’s capital needs dictate.
The Merged Group has determined
Capital management that a loan-to-value ratio of up to 40%
Financial Position The Merged Group will continue PFI’s post-Merger will be appropriate, with
following the Merger already adopted capital management covenants of up to 50%.
The table on this page sets out a summary objectives, which are to safeguard the The covenants on all borrowings require
of the Pro Forma FY13 financial position, Merged Group’s ability to continue as a loan-to-value ratio of not more than
which has been prepared to enable a going concern, whilst maximising 50% and an interest cover ratio33 of
comparison of the standalone, prospective the return to shareholders through not less than 2:1. In addition to this,
financial information for each of PFI and maintaining an optimal balance of registered mortgage security is required
DPF, for the 12 months ending 31 debt and equity. to be provided.
December 2013, with the prospective The increased size of the Merged Group
financial information of the Merged provides the opportunity to re-evaluate
Group. To enable this comparison it certain capital management policies
assumes that the Merger occurred on previously adopted by PFI.
31 December 2012. The Merged Group
information therefore includes 12 months In order to maintain or adjust the
of trading for both PFI and DPF. capital structure, the Merged Group
may adjust the amount of distributions
Further information on the Pro Forma paid to shareholders, return capital to
FY13 of PFI, DPF and the Merged shareholders, issue new shares or sell
Group as set out in the table on this page assets to reduce debt.
can be found in the Prospective Financial
Information section of this Information
Memorandum.
31
To enable valid comparison, it is assumed that DPF is taxed as if it were a listed PIE, rather than a multi-rate PIE as it currently is. DPF Shares rebased for the exchange ratio for the
purposes of comparison.
32
Calculated as total interest bearing debt divided by portfolio value.
33
Calculated as operating earnings before interest divided by interest expense.

Bank facilities Interest Rate Risk Management impact of materially reducing the impact
On or before the Merger, a new facility The Merged Group’s interest rate risk of derivative financial instruments on
agreement will be entered into with PFI’s management strategy will focus, as it does the Merged Group’s interest expense.
existing lenders, ANZ and CBA, and for PFI and DPF, on minimising the The impact is set out under the heading
DPF’s lenders, BNZ and Westpac. Each potential negative economic impact of “Interest expense and bank fees” in the
of the four banks’ facilities will be unpredictable events on the Merged Prospective Financial Information section
documented in one agreement. Group’s financial well-being. To do this, of this Information Memorandum.
the Merged Group will use derivative
The term and pricing of PFI and DPF’s Ownership of the Merged Group
financial instruments, principally interest
current banking facilities will be
rate swaps, to exchange its floating short
maintained or improved, with DPF’s Following the Merger, the Merged Group
term interest rate exposure for fixed long
facilities “folded into” PFI’s facilities. will have approximately 5,300 shareholders,
term interest rate exposure in accordance
with an expected market capitalisation of
These facilities will be documented in with prescribed policy bands. This is a
approximately $510 million 34.
a syndicated facility agreement with the continuation of the current approach to
four banks prior to Application for Final interest rate risk management adopted by DPFM (the parent company of PFIM)
Court Orders. The facility agreement both PFI and DPF. currently owns approximately 1.8% of
will contain financial and other covenants DPF and will therefore own
It is assumed that only DPF’s derivative
similar or identical to those contained in approximately 0.8% of the Merged Group
financial instruments are terminated
PFI’s existing banking documents. following implementation of the Merger.
immediately prior to the Merger and
PFI’s ability to draw down under the replaced with new derivative financial Certain shareholders of DPFM also
syndicated cash advances facilities will instruments at market prevailing rates individually own a total of approximately
be conditional on satisfaction of market in accordance with the Merged Group’s 4.9% of DPF and will therefore own
standard conditions precedent for interest rate risk management policy. approximately 2.3% of the Merged Group
facilities of this nature and obtaining The fair value of DPF’s derivative following implementation of the Merger.
Final Court Orders. financial instruments will be settled
by drawing on existing bank facilities. PFI and DPF consider that the above
The key terms of the facility agreement shareholdings in the Merged Group will
for the Merged Group are set out below: It is assumed that prevailing market rates help align the Manager’s interests with
will be materially lower than the rates of the interests of PFI Shareholders. DPFM
Facility Amounts Facility A: DPF’s derivative financial instruments and the shareholders of DPFM do not
NZ$100 million – BNZ and therefore this process will have the guarantee the performance of PFI Shares.
NZ$75 million – ANZ
NZ$75 million – CBA
Upon completion of the Merger, there will be 411,502,391 PFI Shares on issue, held
Facility B:
NZ$100 million – Westpac as follows:
Commencement The Merger Date Holders Number of Shares Held Percentage of Shares Held
Date
Former PFI Shareholders 220,410,728 53.6%
Maturity Dates Facility A:
31 March 2016 Former DPF Shareholders 191,091,663 46.4%
Facility B:
31 March 2017 Total 411,502,391 100%
Management of the Merged Group

PFI is currently managed by PFIM and DPF is currently managed by DPFM.
PFIM is a wholly owned subsidiary of DPFM. Both PFIM and DPFM have appointed
McDougall Reidy & Co Limited as their subcontractor.
Under the Merger, DPF’s management contract with DPFM will terminate and
PFIM will manage the Merged Group.
Based on an equity value of $273.0 million for PFI and an equity value of $236.6 million for DPF, being the estimated values as at 28 February 2013, when PFI was trading at $1.24 per share.
34

Terms of management agreements The DPF Management Agreement limits • 0.55% of investment properties under
The respective management agreements DPFM’s liability to: management from $250 million to
with PFIM and DPFM are on similar $500 million;
• direct losses or damages only;
terms except as to the fees paid to PFIM • 0.45% of investment properties under
and DPFM and the liability provisions • a maximum amount, in respect of any
management above $500 million.
discussed below. one claim, of the management fee paid
in the 6 months prior to DPF’s claim There are no incentive or other fees payable
The key terms common to each arising; and under the DPF Management Agreement.
management agreement are:
• the total liability of DPFM under the Proposed amendments
• The appointment as manager is on an agreement is limited to the management
exclusive basis. The annual base management fee payable
fee paid to DPFM during the 24
under the PFI Management Agreement
• Each management agreement can be months prior to the claim arising.
will be amended to represent a simple
terminated for non-performance by the The PFI Management Agreement does blend of the current PFI and DPF base
Manager or if the Manager consistently not limit the liability of PFIM. management fees, as follows:
fails to provide a satisfactory and
competent standard of management Management fees • 0.725% of total tangible assets under
services. There are also termination management up to $425 million;
rights if the Manager becomes PFI
• 0.45% of total tangible assets under
insolvent. The current fees payable under the PFI
management above $425 million and
Management Agreement are:
• The Manager has the right to terminate below $775 million;
the management agreement on 6 • an annual base management fee, which
• 0.35% of total tangible assets under
months’ notice. is calculated and paid monthly, of:
management above $775 million.
• The Manager cannot assign its interest – 0.70% of total assets under
The current incentive fee for PFI (as
in the management agreement without management up to $175 million;
described above) will remain unchanged
consent of the company (such consent and will continue to apply.
– 0.35% of total assets under
not to be unreasonably withheld).
management above $175 million and
In addition, the agreement will be
• Each Manager was appointed to is also entitled to an incentive fee;
amended to reflect changes to:
provide similar management services. and
Those management services cover: • the Merged Group’s gearing policy
• an incentive fee, calculated and paid
(as discussed in Section 4);
– investment management duties, on quarterly basis, which is equal to
including recommending 10% of the actual increase in • the level of cover for PFIM’s required
investments to the relevant board shareholder returns which is above professional indemnity insurance
and otherwise managing the 10% in that quarter. Where shareholder increasing to $5 million;
respective property portfolio returns exceed 15% in a quarter, no
• current accounting terminology;
consistent with the objective of payment is due for the actual amount
maximising the value of the of the increase above 15% but the • redundant provisions/schedules; and
shareholders’ investment; amount of the increase above 15% can
be carried forward and added to the • statutory reference changes which have
– property management duties, calculation of shareholder returns in occurred since the agreement was
including supervising the repairs later quarters. However, if shareholder originally entered into.
and maintenance of properties, returns are less than 10% in a quarter,
collecting rents, ensuring adherence All other terms in the agreement will
the deficit can also be carried forward remain the same.
to lease agreements and liaising with and subtracted from the calculation of
tenants; and shareholder returns in later quarters. The chart on the following page compares
– administrative management duties, the prospective management expense
including preparing financial DPF ratio (MER) 35 of the Merged Group for
statements and accounts, ensuring An annual base management fee is the year ended 31 December 2013, with
compliance with statutory calculated and paid monthly under the MER of other LPVs on the NZX
obligations and undertaking all other the DPF Management Agreement of: Main Board, calculated for the 2012
company secretarial responsibilities. financial year for each LPV respectively.
• 0.75% of investment properties under
management up to $250 million;
Calculated as the sum of audit fees, director fees, other expenses and total management fees (including incentive fees), divided by the average book value of investment properties and any
35
properties held for sale. The calculation excludes bad and doubtful debts, interest and bank expense fees and non-recoverable property costs.

Management expense ratio36
1.2 1.18%
1.04%
1.0
0.89% sector AVERAGE = 0.78%
MANAGEMENT EXPENSE RATIO
0.8
0.77% 0.74% 0.73%
0.70%
0.65%
0.6 0.56% 0.53%
0.4
0.2
0.0
NPT DNZ VHP DPF Merged PFI KIP PCT ARG GMT
Group
Direct comparison of externally managed Pursuant to the Listing Rules, the changes As part of the Independent Expert
LPVs total management fees is difficult to PFI’s Management Agreement require Report, Deloitte were also asked to assess
because the level of services provided in approval by PFI Shareholders. The the effect on DPF Shareholders of the
return for the management fee varies. independent directors of PFI have proposed changes to the PFI
For example PFI’s base management appointed PwC to prepare an independent Management Agreement. Deloitte
fee covers the provision of property appraisal report assessing whether the concluded that:
management services, and PFIM is not proposed changes to the PFI “We also believe the management fee changes
entitled to charge additional fees for Management Agreement are “fair” that DPF shareholders will experience if the
leasing, rent reviews and project to the PFI shareholders not associated Merger proceeds are fair.”
management, which some other managers with PFI’s Manager.
of LPVs do. PwC’s analysis of the costs The conclusions of Deloitte should
PwC has concluded that: be read in the context of the full
of these additional services for other
externally managed LPVs over the last “In our opinion, the proposed changes to Independent Expert Report. A copy
five years suggests an average annual cost PFI’s Management Agreement are “fair” to of the Independent Expert Report is
of between 0.21% and 0.33% of average the Non-Associated Shareholders of PFI.” included as part of this Information
total assets is typically incurred for the Memorandum.
The conclusions of PwC should be read
provision of these other services37. Taking in the context of the full Independent
these additional fees into account, the Appraisal Report. A copy of the
Merged Group’s proposed MER, whilst Independent Appraisal Report is included
higher under the existing management as part of this Information Memorandum.
fee structure for PFI, will be the lowest
of the five externally managed LPVs38.
36
The information presented in the table for all LPVs other than PFI and the Merged Group is sourced from the 2012 financial reports and NZSX filings for each LPV. The information presented
above for the PFI, DPF and the Merged Group is pro forma prospective information, as at 31 December 2013, calculated as if the Merger had occurred on 31 December 2012. The companies which
the stock codes set out in the table can be found on the NZX website at www.nzx.com.
37
GMT, KIP, PCT, VHP and PFI are externally managed.
38
Refer to pages 24-25 of the Independent Appraisal Report.

Taxation
implications
of the Merger
A brief summary of the New Zealand taxation implications relating to the
Merger is set out below. PFI and DPF shareholders should consult their own
tax or financial advisor concerning the taxation implications in their particular
circumstances of acquiring, holding and/or disposing of PFI or DPF Shares.
Tax implications of the Merger Issue of shares in PFI (a) the imputed portion will be assessable
for DPF Shareholders PIE regime income and a tax credit can be
claimed for imputation credits
Cancellation of shares in DPF Under the Merger, DPF Shareholders attached; and
will be issued PFI Shares and their DPF
The cancellation of shares in DPF on the Shares will be cancelled. DPF will cease (b) the non-imputed portion will be
Merger Date will be treated as a disposal to be a multi-rate PIE. excluded income.
for tax purposes.
PFI is a “listed PIE” for tax purposes For non-resident shareholders, a fully
The tax treatment of the sale of DPF and subject to the company tax regime. imputed distribution will be assessable
Shares is dependent upon the DPF PFI’s statutory tax rate is 28% and tax income. To the extent that the
Shareholder’s individual circumstances payments result in a credit to its distribution is not fully imputed, the
(i.e. whether the shares are held on capital imputation credit account. imputed portion will be assessable
or revenue account). income, with the non-imputed amount
Distributions from PFI will have deemed excluded income.
Factors that indicate that shares are held imputation credits attached to the
on revenue account, and therefore, are maximum amount available, as Under the listed PIE rules, distributions
likely to be taxable are: determined by the directors of PFI. to non-resident shareholders who hold
(a) if the shares were acquired for the less than 10% of the shares will be subject
purpose of sale or other disposal; or Tax treatment of distributions to New Zealand non-resident withholding
The tax treatment of distributions tax of 15% to the extent the dividend is
(b) if the DPF Shareholder carries on a received from PFI is dependent on imputed. However, the supplementary
business involving dealing in shares whether the recipient is a New Zealand dividend regime should be available to
or other similar property. resident and whether they are an limit the impost of New Zealand tax to
DPF Shareholders are strongly advised to individual, trustee or corporate. 28%. For shareholders who hold at least
seek their own taxation advice as to the 10%, an exemption for withholding tax
For New Zealand resident individual or should apply.
treatment of the sale of their DPF Shares. trustee shareholders, distributions from
Dividend for financial quarter PFI will be excluded income, provided Sale of shares
ending 30 June 2013 that the dividend is not included in their The tax treatment of the sale of shares
return of income. in a listed PIE is dependent upon the
DPF will declare and pay a dividend on
or before 30 June 2013 which will be a Shareholders who are on a tax rate shareholder’s individual circumstances
dividend from a multi-rate PIE. DPF will exceeding 28% could choose not to return (i.e. whether the shares are held on capital
pay tax on the taxable income allocated to the dividend as income, and as a result, or revenue account).
each shareholder at the shareholder’s no further tax would be payable. Factors that indicate that shares are held
nominated PIR to the Inland Revenue. Shareholders on a tax rate of less than on revenue account, and therefore, are
DPF Shareholders will generally have no 28% could choose to include the dividend likely to be taxable are:
further tax liability in respect of their in their return of income, and use the
investment, provided they elect the ‘surplus’ imputation credits to offset their (a) if the shares were acquired for the
correct PIR. other taxable income. To the extent the purpose of sale or other disposal; or
dividend is not imputed, this portion will
(b) if the shareholder carries on a
be excluded income.
business involving dealing in shares
For New Zealand corporate shareholders, or other similar property.
fully imputed distributions will be
assessable income, with the imputation
credits attached able to be claimed as a
tax credit. For distributions that are not
fully imputed:

Comparison of tax implications of holding shares in a multi-rate PIE versus a listed PIE
Multi-rate PIE Listed PIE
Tax on income in the PIE Taxed at investors PIR up to 28% 28% company tax rate
(0% for companies, PIEs, charities)
Distributions – New Zealand Distributions treated as excluded income Excluded income for individual investors,
resident investors provided that the dividend is not included
in their return of income.
For New Zealand corporate shareholders,
the imputed portion of the dividend will
be assessable income, with imputation
credits attached able to be claimed as a tax
credit. The non-imputed portion will be
excluded income.
PIE investors must include the imputed
component in their PIE income (with a
corresponding credit). The non-imputed
component is excluded income.
Distributions – non-resident investors Distributions treated as excluded income Non-imputed portion of dividend treated
as excluded income. Imputed portion of
dividend paid to non-resident shareholders
who hold less than 10% of shares in the
PIE will be subject to New Zealand non-
resident withholding tax of 15%.
Losses Land losses are carried forward in the Tax losses are carried forward in the
PIE (subject to maintaining shareholder PIE (subject to maintaining shareholder
continuity). Unable to be attributed to continuity). Unable to be attributed
investors. to investors.
Exit Redemption of shares should not be Redemption of shares should not be

taxable. Sale of shares subject to tax taxable. Sale of shares subject to tax
depending on whether they are held depending on whether they are held
on capital or revenue account. on capital or revenue account.
Impact of shareholding change Tax implications of the Merger Shareholding change

Under New Zealand tax law there will for PFI Shareholders Under New Zealand tax law there is a
be a change in the shareholding of DPF change in the shareholding of PFI upon
upon the Merger. Accordingly any tax PIE regime the Merger. Accordingly, any imputation
losses existing at the date of Merger will PFI should remain a listed PIE credits will not be carried forward by
not be carried forward in PFI after the throughout the Merger process. PFI after the Merger. The PFI directors
Merger. The DPF directors expect that expect that the majority of the imputation
DPF will not have material tax losses at Dividend for financial quarter credits held by PFI as at the date of
the time of the Merger. ending 30 June 2013 this Information Memorandum will
PFI will declare and pay a dividend on be utilised prior to the Merger.
Other tax considerations or before 30 June 2013 which will be
No stamp duty is payable in New Zealand treated as a dividend from a listed PIE
on share transfers and no notice of such (refer to table above).
transfers is required to be given by a
shareholder to the Inland Revenue.

What are
the key risks?
The Merged Group will face a number Integration risk may include enforcing its security and
of business risks that are largely Whilst PFIM and DPFM, being related requiring the Merged Group to sell
comparable in nature to those faced by parties, share some common personnel individual properties, in order to remedy
both PFI and DPF in the ordinary course and systems, the success of the Merged the breach. While there is an event of
of their businesses. An overview of these Group will depend on the successful default or a potential event of default or
and other risks is outlined below. integration of the operations and records where such distributions would result in
This overview is not intended to be an of each of PFI and DPF and the a default, the bank may also restrict
exhaustive list of all risks associated Manager’s ability to successfully manage distributions to shareholders.
with the Merger, PFI or DPF. a larger property portfolio. PFI and DPF
Funding
have assessed this risk as relatively low.
Merger-specific risks In order to provide for future growth, the
Any merger or acquisition carries with Merged Group business risks Merged Group relies on both equity and
it risks. These are an inherent part of No investment is risk-free and the PFI debt funding including the refinancing
such transactions. PFI and DPF have Shares are no exception. The principal of existing debt facilities. An inability
undertaken due diligence in relation to risk in holding PFI Shares is that a PFI to obtain the necessary funding for the
each other’s business and portfolio, but in Shareholder may not be able to recoup Merged Group or a material increase
doing so, each has relied on information their original investment or they may not in the cost of the funding through an
provided by the other. receive the returns they expect. This increase in interest rates may have an
could happen for a number of reasons, adverse impact on Merged Group’s
In the event that this information is
including: financial strength and future
incorrect or incomplete in any material
performance.
respect, the financial condition or • the value of PFI Shares reduce;
financial performance of these companies Interest rate risk
may be worse than expected, which in • shareholders are unable to sell their
PFI Shares at all – for instance, because Interest expense will be the Merged
turn may have a material adverse effect
the market becomes illiquid or ceases Group’s largest single expense item. Any
on the merged company. As the
to exist; increase in interest rates may reduce the
companies are merging there are no
Merged Group’s profit and, potentially,
warranties given, and the Merged Group • the Merged Group does not pay could cause the Merged Group to breach
will have the liabilities of both companies. distributions; its banking covenants. If a banking
Based on the due diligence process
• the operational and financial covenant is breached, the bank may
followed and the knowledge of PFI and
performance of the Merged Group exercise its rights under the security
DPF management of both portfolios, this
is worse than expected; or arrangements. This may include
risk has been assessed by PFI and DPF
enforcing its security and requiring
as relatively low.
• the Merged Group becomes insolvent the Merged Group to sell individual
Exchange Ratio and is placed in receivership or properties, in order to remedy the breach.
liquidation. While there is an event of default or a
The exchange ratio of 123.21839 PFI
potential event of default or where such
Shares for every DPF Share reflects the Leverage risk distributions would result in a default,
net tangible assets of PFI and DPF as at
DPF’s gearing ratio is 41.2%, compared the bank may restrict distributions to
28 February 2013 and an agreed
to PFI’s current gearing ratio of 33.0%. shareholders.
premium. There is therefore a risk that
The Merged Group is expected
this exchange ratio does not reflect the Derivative financial instrument risk
to have a gearing ratio of 38.6% 40.
market price of PFI Shares or the
The Merged Group will use derivative
respective valuations of PFI and DPF’s Under the facility agreement for the
financial instruments, principally interest
properties on the Merger Date. Merged Group (described on page 40
rate swaps, to exchange its floating short
of this Information Memorandum), the
To mitigate the risk around the fairness of term interest rate exposure for fixed long
Merged Group’s maximum loan-to-value
the exchange ratio, PFI and DPF engaged term interest rate exposure. There is a
ratio is 50%. There is a risk that adverse
Deloitte to prepare the Independent risk that the fair value of these derivative
market movements may cause the Merged
Expert Report. financial instruments will fluctuate
Group loan-to-value ratio to exceed 50%
because of changes in market interest
and thereby result in a breach of banking
rates. This may cause the value of the
covenants. If a banking covenant is
Merged Group’s net tangible assets to
breached, the bank may exercise its rights
also fluctuate.
under the security arrangements. This
39
Refer to footnote 7 on page 13 of this Information Memorandum.

40

Property market risks Geographic risk Landlord costs
The past performance of PFI or DPF’s The property portfolio of the Merged Structural repairs and certain
assets does not guarantee their future Group is concentrated in the Auckland maintenance and capital works to the
performance. The Merged Group will be region with approximately 87% of the Merged Group’s properties which are the
subject to the prevailing property market Merged Group’s property portfolio responsibility of the Merged Group may
conditions in New Zealand – particularly located in that region. The Merged be required under the respective leases.
the market conditions applicable to the Group’s business and performance is The amount of such repairs, maintenance
industrial property sector (given the therefore subject to any changes in the and capital works may exceed planned
Merged Group’s core focus on industrial Auckland economy or to any natural expenditure in this regard, reducing the
property). disasters or other events that affect the Merged Group’s profit and therefore its
Auckland region. dividend pay-out and, potentially, cause
Adverse changes in market sentiment or
the Merged Group to breach its banking
market conditions (whether applying Destruction of properties covenants (to the extent that the works
generally to the property market or and insurance cannot be planned/anticipated and/or the
specifically to industrial property) and
The Merged Group’s property portfolio Manager has not budgeted for those
the activity of competitors in the market
is subject to the risk of total and works). To the extent possible, the
may impact the Merged Group’s ability to
significant destruction from natural Manager will work with its tenants to plan
acquire, manage or develop assets, as well
disasters (such as earthquakes) and other and secure appropriate funding for any
as the value of the Merged Group’s assets.
events causing damage to those properties required repairs, maintenance and capital
These impacts could lead to a reduction
– particularly where such events affect the works.
or loss in reported profit, distributable
Auckland region. Destruction of part of
earnings or the carrying value of assets. Future distribution payments
the Merged Group’s property portfolio
Rent reviews and lease renewals may result in a loss of rental income There can be no assurance that any
which may affect the Merged Group’s distributions will be paid or as to the
The property market conditions
ability to provide distributions and the level to which those distributions will be
prevailing at the time may have an effect
value of the PFI Shares. imputed, as actual events might differ
on rent reviews and lease renewal
from the assumptions used in assessing
negotiations, which in turn may result The Merged Group will have a
the ability of the Merged Group to pay
in lower than anticipated rent reviews comprehensive material damage, business
and impute those distributions. There
or lease renewals which would have a interruption and public and statutory
can be no assurance that future
negative impact on the Merged Group’s liability insurance covering the portfolio
distribution payments will be made under
earnings and the value of the relevant and utilises policy specifications and
the PIE regime as the Merged Group’s
building/s or tenancy/ies. insured limits customarily carried for
PIE status could be lost by events outside
similar portfolios in New Zealand.
Tenancy default of the Merged Group’s control.
There are some types of losses (such
The value of the Merged Group’s Loss of key personnel
as earthquake and volcanic eruption)
properties is primarily dependent upon
that are insured but subject to higher The Merged Group’s operations are
existing or new tenants continuing to
deductibles. The insurance programme reliant on PFIM, as the Manager,
operate on a profitable basis and abiding
will be renewed annually. The scope of retaining and attracting quality senior
by the terms and conditions of their lease.
insurance will be dependent on a number executives and other employees. There is
If a tenant fails to pay its rent when due it
of factors such as the continued no guarantee that the Manager will be able
may affect the Merged Group’s ability to
availability of cover, the nature of the to retain these employees, or that suitable
satisfy its obligations to pay interest under
risks to be covered, extent of the proposed replacements will be hired in the event of
its financing arrangements, the value of
coverage and the costs involved. their departure or that it will be able to
the property, as well as the Merged
prevent them from competing with the
Group’s profit and earnings. Consistent
Manager in the event of their departure.
with the practice of PFIM and DPFM,
PFIM will continue to actively monitor
the financial wellbeing of its tenants.

Given the nature of a number of the Regulatory issues and changes in law What happens if the Merger does
Merged Group business risks referred PFI, DPF and the Merged Group are not proceed?
to above, it is not practicable to quantify exposed to government regulatory
those risks. Consistent with the practice policies that could have a direct bearing If the Merger is not approved, Final
of PFIM and DPFM, PFIM will continue on business operations. No assurance Court Orders are not granted or any
to monitor, on an ongoing basis, its can be given that current laws and other condition to the Merger is not
banking and other arrangements in regulations or the adoption of new laws satisfied, then the Merger, in the form
the context of market movements and regulations, particularly those related contemplated in this Information
to determine the likelihood of any to the property market and tenancy, may Memorandum, will not be implemented.
risk occurring. not have a material adverse effect on the In such event, each of PFI and DPF will
Merged Group’s operations, financial continue to operate its own business.
General business risks
performance or prospects.
Economic activity
Taxation
The Merged Group’s business and its
performance are subject to changes in the Changes in New Zealand tax law, or
New Zealand economy at large, the changes in the way New Zealand tax
regional economies in which its properties law is interpreted, have the potential to
are located and the global economy impact on returns. Changes to the rates
including but not limited to customer of income tax applying to individuals,
demand, inflation, interest rates, companies and/or the Merged Group
exchange rates and the government’s similarly may impact after-tax
regulatory and fiscal policy. shareholder returns. If the Merged Group
were to lose its PIE status, this would
It is possible that a downturn in those impact after-tax shareholder returns.
economies, or within the Merged Group’s PIE status could be lost as a result of
customer base, could have a material matters outside of the control of the
adverse impact on the Merged Group’s Merged Group. The introduction
performance. of a capital gains tax or changes to
The Merged Group could be affected New Zealand tax laws relating to
by national or international events or depreciation may also affect the
occurrences which result in non- returns received by shareholders.
functioning financial markets and/or
decreased investor and/or borrower No Guarantee
confidence. These market risks include
Nothing contained in this Information
natural disasters (such as earthquakes),
Memorandum should be construed as a
war, acts of terrorism, a recession, or a
promise of profitability or of investment
downturn in a financial market or the
returns in respect of PFI or DPF, and
failure of a finance market participant.
no person named in this Information
Movements in New Zealand and
Memorandum (including PFI, DPF
international stock markets and changes
and DPFM, nor any of their respective
in economic conditions or interest rates
directors, officers or employees) or any
may affect prices at which the PFI
other person gives any guarantee or
Shares trade.
promise as to the future performance of
Any of the above changes or events could PFI or DPF of the future value or share
reduce the Merged Group’s ability to price of PFI Shares or payment of any
source funds and adversely affect the distributions in relation to PFI Shares.
Merged Group’s borrowing margins
and overall cost of funds.

SECTION
DIRECTORS +
MANAGEMENT
leading
TOGETHER
Goodman Fielder, 92-98 Harris Road, East Tamaki, Auckland DIRECTORS + MANAGEMENT 49
DIRECTOR
PROFILES
The board of the Merged Group

will initially comprise Peter Masfen,
Humphry Rolleston and Anthony
Beverley (PFI’s current independent
directors), Arthur Young (DPF’s
current chairman), John Waller
(a DPF independent director) and
Gregory Reidy (who will remain
on the board as the management Peter Humphry
representative).
Masfen Rolleston
Chairman, Independent
Independent Director Director
Peter joined the PFI Humphry joined the PFI

Name Position board in May 2002 and board in 1994 and has
Peter Masfen Chairman, Independent Director was appointed chairman interests in a number of
in June 2002. private companies in
Humphry Rolleston Independent Director New Zealand.
He is chairman of the
Anthony Beverley Independent Director Masfen Holdings Limited He is chairman of
group of companies and ANZCRO Pty Limited
Arthur Young Non-Executive Director is a director of and has and a director of SKY
interests in a number of Network Television
John Waller Independent Director private companies in Limited, Mercer Group
New Zealand including Limited, Infratil Limited,
Gregory Reidy Managing Director Mount Linton Station Asset Management
Limited and Greymouth Limited and Matrix
Petroleum Limited. He is Security Limited.
a trustee of King’s
College, Auckland and
King’s School, Auckland,
and Woolf Fisher Trust.
50 DIRECTORS + MANAGEMENT
Anthony Arthur John Gregory
Beverley Young Waller Reidy
Independent Non-Executive Independent Managing
Director Director Director Director
Anthony joined the PFI Arthur has been a John became an Greg has been a director
board in 2001. He is a director and chairman independent director of DPF since 2010 and
professional director and of DPF since 2003. of DPF in 2010. PFI since 2012 and is
consultant, consulting Managing Director of
He is senior partner of He is also on a number
to both the private and both PFIM and also
Chapman Tripp and of boards, including the
public sector on a wide DPFM, the respective
has over 55 years’ legal Bank of New Zealand
variety of property managers of PFI
experience. Arthur acts (Chairman), National
matters. and DPF.
as a professional trustee Australia Bank, Fonterra
Anthony’s other for a number of clients, Cooperative Group, the He is also Managing
directorships include including various client Eden Park Trust Board Director of McDougall
Marlborough Lines trusts that are significant (Chairman), SKY Reidy & Co Limited,
Limited, Harbour Quays DPF Shareholders. Network Television which among other
A1 Limited, Harbour Limited, Haydn & Rollett things, has been
He has had extensive
Quays D4 Limited and Limited and Alliance subcontracted by PFIM
directorate experience
Harbour Quays F1F2 Group Limited. Prior and DPFM to undertake
over the years and
Limited. He was formerly to these appointments, the property and
current directorships
head of property for John was a partner at administrative
involving the property
AMP Capital Investors PwC for over 20 years. management services for
industry include
(New Zealand) Limited. PFI and DPF
companies in each of
respectively. He has a
the McConnell/Hawkins
background in property
Group, the Southpark
investment, funds
Group, the Dresden
management and
Group and the Haydn
development.
& Rollett Group.
Greg has more than 18
Arthur was a director
years’ experience in the
of Equitable Mortgages
management, ownership
Limited when it was
and development of
placed into receivership
industrial, commercial
on 17 December 2010.
and retail property. Greg
is also a shareholder of
DPFM (the owner of
PFIM) and McDougall
Reidy & Co Limited.
DIRECTORS + MANAGEMENT 51
Senior
Management
Profiles
PFI is managed by PFIM, a private company
owned by interests associated with McDougall
Reidy & Co Limited. PFIM took over the PFI
Management Agreement on 20 January 2012,
by way of assignment from AMP Capital Investors
(New Zealand) Limited.
PFIM has appointed McDougall Reidy & Co Limited

as its subcontractor to provide the property and Gregory
administrative management services required under
the PFI Management Agreement. Reidy
Management of the Merged Group following the Managing Director
Merger will continue to be undertaken by PFIM
pursuant to the PFI Management Agreement, as
amended as part of the Merger. See page 51 for
The senior management team will include those people biographical details.
opposite who will perform the following roles.
Nick Simon Craig
Cobham Woodhams Peirce
General Manager General Manager Chief Financial Officer
(Joint) (Joint) and Company Secretary
Nick is currently General Simon is currently Craig is currently Chief

Manager of PFI. Prior General Manager of Financial Officer and
to this, Nick spent more DPF. Simon joined Company Secretary of
than four years as McDougall Reidy & Co PFI, DPF and McDougall
Development Manager Limited as Development Reidy & Co Limited.
for McDougall Reidy Manager in 2005. Prior Craig joined McDougall
& Co Limited, managing to joining Simon spent Reidy & Co Limited as
industrial and seven years in Tokyo and Chief Financial Officer
commercial development London working in the and Company Secretary
projects. He also has financial and banking in 2009. He has more
previous experience in markets. He is a graduate than 10 years’ property
the listed property sector of Canterbury University industry experience
with Capital Properties where he completed his having previously spent
New Zealand and has a Bachelor of Commerce six years in London
background in property majoring in Accounting working in property funds
valuation and funds and Marketing. Simon is management at LaSalle
management. Nick is a also a shareholder of Investment Management
registered valuer and a DPFM (the owner of and General Electric Real
graduate of Massey PFIM) and McDougall Estate. Craig is a graduate
University. Nick is also Reidy & Co Limited. of Auckland University
a shareholder of DPFM and is a Chartered
(the owner of PFIM) and Accountant, having
McDougall Reidy & Co trained as an auditor at
Limited. PricewaterhouseCoopers.
DIRECTORS + MANAGEMENT 53
SECTION
PROSPECTIVE
FINANCIAL
INFORMATION
strong
DEC, 558 Te Rapa Road, Hamilton
togEther PROSPECTIVE FINANCIAL INFORMATION 55
Why should you
read this section?
In this section, you can find out detailed information about PFI, DPF and the
Merged Group’s prospective financial performance, including the important
assumptions that have been used in the preparation of the prospective
financial information.
This section contains two different sets If you do not understand the information occur as expected, and the variations may
of prospective financial information: in this section, you should consult a be material. Accordingly, neither the
financial adviser. Relevant Directors nor any other person
• The first set is full year pro forma
can provide any assurance that the
prospective financial information
Basis of Preparation prospective financial information will be
(Merger Pro Forma Prospective Financial
achieved and investors are cautioned not
Information, or “Pro Forma FY13”) The Pro Forma FY13 and the Forecast to place undue reliance on the prospective
which has been prepared to enable FY13 have been prepared in accordance financial information in this Information
comparison of the standalone, with Financial Reporting Standard 42 – Memorandum.
prospective financial information for Prospective Financial Statements.
each of PFI and DPF, for the 12 The prospective financial information in
months ending 31 December 2013, The Pro Forma FY13 and the Forecast this Information Memorandum includes
with the prospective financial FY13 are based on the Relevant Board’s unaudited actual results for the period
information of the Merged Group. To assessment of events and conditions from 1 January 2013 to 28 February
enable this comparison it assumes that existing at the date of this Information 2013, has been prepared for the purpose
the Merger occurred on 31 December Memorandum and the assumptions set of the Merger and may not be suitable for
2012, and hence the Merged Group out on pages 64 to 69, page 76 and any other purpose.
information includes a full 12 months accounting policies discussed below.
For the purposes of this section, the The Pro Forma FY13 and the Forecast
of trading for both PFI and DPF.
“Relevant Board” means: FY13, including the assumptions
• The second set is the prospective underlying them, have been prepared
financial information for PFI assuming • in respect of prospective financial by the Manager and approved by the
the Merger completes on 1 July 2013 information relating to PFI, the PFI Relevant Boards. The Relevant Boards
as anticipated (Statutory Prospective board of directors; approved the Pro Forma FY13 and the
Financial Information, or “Forecast • in respect of prospective financial Forecast FY13, and authorised their use
FY13”) which has been prepared to information relating to DPF, the DPF in this Information Memorandum, on
enable future comparison against PFI’s board of directors; and 22 May 2013.
actual NZ GAAP financial results that
• in respect of prospective financial Prospective financial information by its
will be prepared for the year ending
information relating to the Merged nature involves risks and uncertainties,
31 December 2013. This set assumes
Group, the PFI board of directors many of which are beyond the control
the Merger occurs on 1 July 2013, and
(which information has also been of PFI and DPF. These risks and
hence includes six months trading for
approved by the persons named in uncertainties include, but are not limited
DPF from the date of Merger, and a
Section 5 of this Information to, those set out in Section 4 of this
full year’s trading for PFI.
Memorandum who will join the PFI Information Memorandum on page 45
This section should be read in board upon completion of the Merger), under the heading “What are the
conjunction with the risk factors set key risks?”.
out in Section 4 of this Information and “Relevant Directors” means the
directors of the Relevant Board. There is no present intention to update
Memorandum on page 45 under the
the prospective financial information in
heading “What are the key risks?” and
The Relevant Directors believe that the this Information Memorandum or to
other information contained in this
Pro Forma FY13 and the Forecast FY13 publish prospective financial information
Information Memorandum.
have been prepared with due care and in the future, other than as required by
The prospective financial information attention, and consider the assumptions accounting standards. PFI will present a
is presented in New Zealand dollars and when taken as a whole to be reasonable comparison of the Forecast FY13 with
is rounded, which may result in some at the time of preparing this Information actual financial results when reporting
discrepancies between the sum of Memorandum. However, actual results in accordance with NZ GAAP.
components and totals within tables, and are likely to vary from the information
also in certain percentage calculations. presented as anticipated results may not
56 PROSPECTIVE FINANCIAL INFORMATION

This section 6 contains:
Page(s)
• An overview of the main factors that affect the Merged Group operational and financial performance 57
• Merger Pro Forma Prospective Financial Information (Pro Forma FY13), being:
– PFI prospective financial information for the 12 month period to 31 December 2013 (assuming no Merger) 59-63
– DPF pro forma prospective financial information for the 12 month period to 31 December 2013 (assuming 59-63
no Merger)
– Merged Group pro forma prospective financial information for the 12 month period to 31 December 2013 59-63
(assuming Merger completed 31 December 2012)
• Statutory Prospective Financial Information (Forecast FY13) for the 12 month period to 31 December 2013 71-75
(assuming Merger completed 1 July 2013)
• Investigating Accountant’s Report 78
OVERVIEW OF THE MAIN FACTORS THAT AFFECT THE MERGED GROUP’S OPERATIONAL AND FINANCIAL PERFORMANCE
PFI’s, DPF’s and the Merged Group’s in applying accounting policies, that have The principal non-GAAP financial
operational and financial performance, the most significant effect on the amounts information included is distributable
and that of the New Zealand commercial recognised in the financial statements profit. In all cases, distributable profit
property sector generally, is driven relate to investment properties, derivative is defined as profit (as determined in
primarily by occupancy of investment financial instruments and deferred tax. accordance with IFRS for the period),
properties, the ability to increase the For further details on these accounting adjusting for additional revenue booked
rental income of tenanted properties, policies, refer to PFI’s audited financial as a result of fixed rent review accounting
the acquisition or disposal of investment statements for the year ended 31 December entries, unrealised changes in the values
property, the valuation of investment 2012. For details on how to access PFI’s of investment properties, realised gains
properties and borrowing costs. This is financial statements, see Section 7 of this or losses on disposal of investment
not an exhaustive list of all factors which Information Memorandum on page 83 properties (net of tax on depreciation
affect PFI, DPF and the Merged Group’s under the heading “Access to information claw-back), unrealised changes in the
financial performance. These factors and statements”. values of derivative financial instruments,
should be read in conjunction with deferred tax and other one off items as
the information set out in Section 4 Non-GAAP financial information determined by the Relevant Directors and
of this Information Memorandum on described in the notes to the prospective
page 45 under the heading “What are You should be aware that certain financial financial information. Distributable profit
the key risks?”. information included in this Information is used by the Relevant Directors to assist
Memorandum is considered “non-GAAP in determining dividends to shareholders.
The preparation of financial statements financial information”, including profit
requires the Relevant Directors to make measures other than net profit for the The tables of non-GAAP financial
judgments, estimates and assumptions year as reported in the statutory financial information provide a reconciliation
that affect the application of PFI, DPF statements. The notes to the various of distributable profit to the prospective
and the Merged Group’s accounting tables where non-GAAP financial financial information.
policies and the reported amounts of information is reported include further
assets and liabilities, income and information to help you interpret those
expenses. The areas of estimation terms which are not defined under
uncertainty and critical judgments NZ GAAP.
PROSPECTIVE FINANCIAL INFORMATION 57

MERGER PRO FORMA
PROSPECTIVE FINANCIAL
INFORMATION
(Pro Forma FY13)
This section contains the full year pro forma prospective financial information
(Merger Pro Forma Prospective Financial Information, or “Pro Forma FY13”)
which has been prepared to enable comparison of the standalone, prospective
financial information for each of PFI and DPF, for the 12 months ending
31 December 2013, with the prospective financial information of the Merged
Group. To enable this comparison it assumes that the Merger occurred on
31 December 2012, and hence the Merged Group information includes a full
12 months of trading for both PFI and DPF.
This section contains:
Page(s)
• PFI prospective financial information for the 12 month period to 31 December 2013 (assuming no Merger); 59-63
• DPF pro forma prospective financial information for the 12 month period to 31 December 2013 (assuming 59-63
no Merger);
• Merged Group pro forma prospective financial information for the 12 month period to 31 December 2013 59-63
(assuming Merger completed 31 December 2012);
which includes prospective consolidated statements of comprehensive income, prospective consolidated
statements of changes in equity, prospective consolidated balance sheets and prospective consolidated statements
of cash flows;
• a description of the Relevant Board’s general and specific assumptions that underpin the Pro Forma FY13; and 64-69
• an analysis of the sensitivity of the Pro Forma FY13 to changes in a number of key assumptions. 69
Note: DPF’s year end is 31 March and DPF is an unlisted multi-rate PIE, whereas the information presented in this section
assumes a year end of 31 December and that DPF is a listed PIE. Accordingly, the information in this section for DPF
is pro forma.

Merger Pro Forma PROSPECTIVE CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2013
DPF Merger Merged Group

All figures in $000’s PFI (pro forma) adjustments (pro forma)
OPERATING REVENUE
Rental income 31,634 32,053 - 63,687
Interest income 3 11 (11) 3
Total operating revenue 31,637 32,064 (11) 63,690
OPERATING EXPENSES
Audit fees and other fees paid to auditors for agreed upon
61 45 (15) 91
procedures engagements
Directors’ fees 180 87 13 280
Interest expense and bank fees 8,646 11,508 (2,795) 17,359
Management fees 2,009 2,751 28 4,788
Non-recoverable property costs 936 1,072 - 2,008
Other expenses 611 286 (141) 756
Total operating expenses 12,443 15,749 (2,910) 25,282
Total operating earnings 19,194 16,315 2,899 38,408
NON OPERATING INCOME AND EXPENSES

Unrealised net change in fair value of investment properties 2,768 3,368 - 6,136
Loss on disposal of investment properties - (757) - (757)
Unrealised net change in fair value of derivative
2,990 4,408 (4,408) 2,990
financial instruments
Total non operating income and expenses 5,758 7,019 (4,408) 8,369
Profit/(loss) before taxation 24,952 23,334 (1,509) 46,777
TAXATION
Current taxation 4,271 2,868 800 7,939
Deferred taxation (1,798) 1,302 (1,234) (1,730)
Total taxation 2,473 4,170 (434) 6,209
Profit/(loss) for the year attributable to the shareholders 22,479 19,164 (1,075) 40,568
Other comprehensive income - - - -

Total comprehensive income/(loss) for the year
22,479 19,164 (1,075) 40,568
attributable to the shareholders

Merger Pro Forma Prospective Consolidated
Statement of Changes in Equity

SHARE CAPITAL
Balance as at 1 January 2013 171,471 230,512 6,131 408,114
Dividend reinvestment - 336 (336) -
Share capital as at 31 December 2013 171,471 230,848 5,795 408,114
RETAINED EARNINGS
Balance as at 1 January 2013 78,613 (995) 54 77,672
Profit/(loss) for the year 22,479 19,164 (1,075) 40,568
Other comprehensive income - - - -
Dividends to shareholders (15,000) (13,267) (1,549) (29,816)
Retained earnings as at 31 December 2013 86,092 4,902 (2,570) 88,424
Total equity as at 31 December 2013 257,563 235,750 3,225 496,538

Statement of Financial Position
As at 31 December 2013

CURRENT ASSETS
Bank 64 34 (19) 79
Accounts receivable 730 278 (247) 761
Prepayments and other assets 1,728 913 - 2,641
Total current assets 2,522 1,225 (266) 3,481
NON-CURRENT ASSETS
Goodwill - - 9,761 9,761
Prepayments and other assets 6,132 3,825 - 9,957
Investment properties 396,427 415,695 - 812,122
Total non-current assets 402,559 419,520 9,761 831,840
Total assets 405,081 420,745 9,495 835,321
CURRENT LIABILITIES
Accounts payable, accruals and other liabilities 1,813 1,981 (253) 3,541
Taxation payable 1,415 956 266 2,637
Derivative financial instruments 5,107 7,695 (7,695) 5,107
Total current liabilities 8,335 10,632 (7,682) 11,285
NON-CURRENT LIABILITIES
Borrowings 133,100 173,300 11,798 318,198
Deferred taxation 6,083 1,063 2,154 9,300
Total non-current liabilities 139,183 174,363 13,952 327,498
Total liabilities 147,518 184,995 6,270 338,783
Net assets 257,563 235,750 3,225 496,538
EQUITY
Share capital 171,471 230,848 5,795 408,114
Retained earnings 86,092 4,902 (2,570) 88,424
Total equity 257,563 235,750 3,225 496,538

Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 31,090 30,313 245 61,648
Payments to suppliers (4,500) (5,514) 58 (9,956)
Interest received 3 11 (11) 3
Interest and other finance costs paid (8,488) (11,636) 2,598 (17,526)
Income tax paid (3,947) (1,912) (534) (6,393)
Net cash flows from operating activities 14,158 11,262 2,356 27,776
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales of investment properties - 12,295 - 12,295
Purchases and development of investment properties (18,165) (8,427) - (26,592)
Net cash flows from investing activities (18,165) 3,868 - (14,297)
CASH FLOWS FROM FINANCING ACTIVITIES

Distributions to shareholders (15,000) (13,267) (1,549) (29,816)
Proceeds from term loans 26,400 8,300 500 35,200
Repayments of term loans (7,500) (11,110) (990) (19,600)
Proceeds from share issues - 336 (336) -
Net cash flows from financing activities 3,900 (15,741) (2,375) (14,216)
Net change in cash and cash equivalents (107) (611) (19) (737)
Cash and cash equivalents at beginning of period 171 645 - 816
Cash and cash equivalents at end of period 64 34 (19) 79

Merger Pro Forma Prospective Distributable Profit Per
Share Calculations (Non-GAAP Financial Information)

Total comprehensive income/(loss) 22,479 19,164 (1,075) 40,568

for the year attributable to the shareholders
Less: Unrealised net change in fair value of investment properties (2,768) (3,368) - (6,136)
Less: Losses on disposals of investment properties - 757 - 757
Plus: Tax on depreciation claw-back on disposals of
- 115 - 115
investment properties
Less: Unrealised net change in fair value of derivative
(2,990) (4,408) 4,408 (2,990)
financial instruments
Less: Deferred taxation (1,798) 1,302 (1,234) (1,730)
Less: Fixed rent reviews (367) (134) - (501)
Less: Other (12) - - (12)
Total distributable profit 14,544 13,428 2,099 30,071
Shares on issue 220,410,728 191,091,66341 411,502,391
Distributable profit per share (cents per share) 6.60 7.03 7.31
DPF shares rebased for the merger ratio for the purposes of comparison.
41

Notes to the Merger Pro Forma
Prospective Financial Information
(Pro Forma FY13)
Accounting policies General assumptions Specific assumptions

The accounting policies applied to the The following general assumptions are In addition to the general assumptions,
preparation of the Pro Forma FY13 are relevant to the Pro Forma FY13: below are specific assumptions that have
those which are expected to be used in been adopted by the Relevant Board in
• Competitive and regulatory
future reporting periods. Apart from the preparing the Pro Forma FY13.
environment: There will be no
accounting policy for goodwill and the material change in the competitive Merger
method of computation of deferred tax, operating, legislative and regulatory
they are consistent with the accounting The Merger is a business combination
environment nor any significant
policies and methods of computation that is assumed to be accounted for in
technological change or new entrants
as set out in the most recent audited accordance with NZ IFRS 3 (Business
that will materially change the
financial statements of PFI. PFI and DPF Combinations). It has been assumed that
competitive environment.
have the same accounting policies, other PFI is will be the “acquirer” in
than in respect of current and deferred • Property markets: There will be no accordance with NZ IFRS 3.
tax. The effect of this different policy and material change in the general
economic environments that PFI, DPF Rental income
in the change of computation of PFI’s
deferred tax are set out in this Section and the Merged Group operate in. Rental income is based on current
under the heading “Taxation”. The contracted rent from lease agreements.
• Economic conditions: Inflation rates
accounting policy for goodwill is Accounting adjustments in respect of
in New Zealand are assumed to be 1.6%
set out on page 67 of this Information lease incentives and fixed rent reviews are
for the year ending 31 December 2013
Memorandum. also included. Together, this accounts for
and the Official Cash Rate (as
approximately 98% of the rental income
PFI will adopt NZ IFRS 13 – Fair Value determined from time to time by the
recognised in the Merged Group’s Pro
Measurement, in its accounts for the year Reserve Bank of New Zealand) and
Forma FY13.
ended 31 December 2013. This standard the interest rate curve will not change
does not change when an entity is materially from current levels. Rent reviews as determined by lease
required to use fair value but provides agreements are assumed to be completed
• Investment property acquisitions or
guidance on how to determine fair during the year, with 35% of PFI’s
disposals: There will be no material
value. It also expands the disclosure contracted rent and 51% of DPF’s
investment property acquisitions or
requirements about the assumptions contracted rent due for and assumed to be
disposals other than those specifically
made and the qualitative impact of reviewed during the period. It is assumed
mentioned in the prospective financial
those assumptions on the fair value that these reviews will result in an average
information.
determined. This may result in more annual increase on the previously
detailed disclosure around the valuation • Accounting standards: Aside from contracted rental income of 1.7% and
assumptions but should not materially NZ IFRS 13 – Fair Value Measurement, 2.5% respectively. These increases are
impact the reported fair values, on the there will be no changes in accounting as a result of fixed and index linked rent
assumption that PFI’s credit spread and standards which would have a material review mechanisms, and it has been
the credit default risk of both parties to effect on PFI, DPF or the Merged assumed that there is no market rental
the Merged Group’s derivative financial Group. growth during 2013.
instruments does not change materially. • Material contracts: There will be no For those leases expiring during the year
Other than as described here, the Pro material amendments to any material ending 31 December 2013, re-leasing
Forma FY13 assumes no material change agreements, other than those referred assumptions have been applied based on
in accounting policies throughout the to in relation to PFI’s banking facilities the Relevant Board’s expectation of
period ended 31 December 2013. on page 40 and also in relation to the market conditions for each tenancy.
PFI Management Agreement on page Re-leasing assumptions are also a key
41 in the Profile of the Merged Group driver of non recoverable property costs.
Principal Assumptions Business section of this Information
Rental income for the Merged Group
The principal assumptions upon which Memorandum.
represents an aggregation of rental
the Pro Forma FY13 are based are
• New Zealand tax laws: There will be income of PFI and DPF.
summarised below and should be read in
no material change to the tax regime in
conjunction with the sensitivity analysis
New Zealand, and specifically in
set out below, the risk factors set out in
relation to the PIE regime and taxation
Section 4 of this Information
of investment properties.
Memorandum on page 45 under the
heading “What are the key risks?”, and • Senior management: Senior
PFI’s accounting policies. management and other key staff of the
Manager will continue in their roles.

Management fees

Management fees 2,009 2,751 28 4,788
PFI and DPF base management fees • Total tangible assets under PFI, but not DPF, currently has an
have been calculated based on the current management up to $425 million: incentive fee under its management
PFI and DPF base management fee scales 0.725%; agreement. As documented in the
(refer to Section 4 of this Information proposed revised management agreement,
• Total tangible assets under
Memorandum). the incentive fee will apply to the
management above $425 million up to
Merged Group.
The Merged Group’s base management $775 million: 0.45%;
fees have been calculated based on the No incentive fee has been assumed
• Total tangible assets under
following tiers, as documented in the for 2013 for PFI or the Merged Group.
management above $775 million:
proposed revised management agreement Please refer also to page 69 for discussion
0.35%.
(refer to Section 4 of this Information of the sensitivity of this assumption.
Memorandum):
Interest expense and bank fees

Interest expense and bank fees 8,646 11,508 (2,795) 17,359
Interest expense and bank fees comprises For DPF, it is assumed that DPF’s It is assumed that prevailing market rates
bank margins and fees, payments made in current derivative financial instruments, will be materially lower than the rates of
respect of derivative financial instruments averaging $115 million with an average DPF’s derivative financial instruments
and BKBM (float rates). current interest rate of 6.0% for an and therefore this process will have the
average duration of 2.9 years from impact of materially reducing the impact
Bank margins and fees 1 January 2013, continue. of derivative financial instruments on the
For each of PFI and DPF the borrowings Merged Group’s interest expense.
For the Merged Group, it is assumed that
facilities as described in their respective
DPF’s derivative financial instruments BKBM (float rates)
last financial statements has been
are terminated immediately prior to the
assumed to continue for the duration PFI, DPF and the Merged Group have
Merger and replaced with new derivative
of the prospective period. assumed market forecasts for BKBM
financial instruments at market prevailing
(float rate), allowing 0.25% on top of
For the Merged Group, it has been rates in accordance with the Merged
these forecasts.
assumed that the bank facilities Group’s interest rate risk management
described in Section 4 of this Information policy (refer Section 4). The fair value Please refer also to page 69 for discussion
Memorandum will be in place for the of DPF’s derivative financial instruments of the sensitivity of this assumption.
duration of the prospective period, with of $12.103 million is settled by DPF
margins and fees at levels slightly lower drawing on its bank facilities prior to
than those paid by PFI or DPF. the Merger.
Derivative financial instruments Termination of DPF’s derivative financial

instruments allows the Merged Group to
For PFI, it is assumed that PFI’s current pay shareholders higher dividends during
derivative financial instruments, the prospective period than would
averaging $73 million with an average otherwise be the case.
current interest rate of 6.4% for an
average duration of 2.8 years from
1 January 2013, continue.

Operating expenses excluding interest expense and bank fees and management fees

Audit fees and other fees paid to auditors for agreed upon
61 45 (15) 91
procedures engagements
Directors’ fees 180 87 13 280
Non recoverable
936 1,072 - 2,008
property costs
Other expenses 611 286 (141) 756
Directors’ fees Transaction costs Unrealised net change in fair value

Directors’ fees for the Merged Group Estimated transaction costs of of derivative financial instruments
have been recalculated to reflect the scale approximately $1.750 million (excluding PFI and DPF’s derivative financial
of fees currently paid to the PFI board. GST) are expected to be incurred before instruments are assumed to reduce
30 June 2013 in completing the Merger. over time, as the closer the derivative
Non recoverable property costs In the Pro Forma FY13 these have been is to maturity, the smaller the fair value
Non recoverable property costs represents treated as an adjustment to equity on of the derivative (all other things being
property maintenance and operating 31 December 2012. equal), as the unrealised liability is
expenses not recoverable from tenants, realised and paid.
The transaction costs are being paid
property valuation fees and property
to external advisers and service providers, As noted in the assumptions regarding
leasing costs. The establishment and
including legal, accounting and financial interest expense on page 65, the Merged
release of impaired receivables has
advisers and design and printing costs. Group assumes that DPF’s derivative
also been included in non recoverable
None of the transaction costs are being financial instruments are terminated
property costs.
paid to any related parties of PFI or DPF. immediately prior to the Merger and
Non recoverable property costs for the replaced with new derivative financial
Merged Group represents an aggregation Unrealised net change in fair value instruments at market prevailing rates.
of PFI and DPF. of investment properties Interest rates during the prospective
See the assumptions regarding investment period are assumed to mirror the forward
Other operating expenses properties on page 68. interest rate curve on which the derivative
All other operating expenses assume a financial instruments are priced hence,
Please refer also to page 69 for discussion other than the realisation of PFI’s
level of expenditure that is broadly in line
of the sensitivity of this assumption. historical derivative financial instrument
with the prior year.
liability, there is no further fair value
All other operating expenses in the Loss on disposal of investment
adjustment in relation to the derivative
Merged Group represents an aggregation properties
financial instruments during the
of these costs for PFI and DPF, after The loss on disposal of investment prospective period.
allowing for assumed savings. properties represents the combined
loss on disposal of DPF properties
132 Pavilion Drive and 89-91 Captain
Springs Road which settled in January
and February 2013 respectively.
No further gains or losses on disposal
of investment properties are forecast.
The loss on disposal of investment
properties for the Merged Group
represents an aggregation of loss
on disposal of investment properties
for PFI and DPF.

Taxation

Current taxation 4,271 2,868 800 7,939
Deferred taxation (1,798) 1,302 (1,234) (1,730)
As noted in Section 3, DPF is a multi-rate one-off reduction in deferred tax expense on the difference between the Merger
PIE whereas PFI is a listed PIE. As a of $1.782 million and a corresponding Date fair value of the consideration
multi-rate PIE, DPF does not currently decrease in the deferred tax liability transferred to the DPF Shareholders
account for current or deferred tax, but which has been reflected in the Pro and the Merger Date fair values of the
rather attributes all its taxable income Forma FY13. identifiable assets and liabilities of DPF.
between its shareholders based on the
Deferred tax on depreciation claimed The consideration to DPF Shareholders
number of shares held by them. DPF
is now calculated on a consistent basis under the Merger is in the form of shares
then pays tax on the taxable income
for PFI, DPF, and the Merged Group. in PFI. The consideration is recorded as
allocated to each shareholder at the
the fair value of the PFI Shares issued at
shareholder’s nominated PIR on a The principal reason for the merger
the Merger Date to effect the transaction.
quarterly basis to the Inland Revenue. adjustments to current taxation is the
increase in current tax payable as a result The fair values of the identifiable assets
In order for DPF Shareholders to be able
of lower interest costs (see the assumptions and liabilities of DPF as at 31 December
to compare their forecast distributable
regarding interest expense and bank fees). 2013, and the resulting goodwill arising
profit with that of the Merged Group on
The principal reason for the merger from the Merger, are shown for indicative
a consistent post tax basis, it has been
adjustments to deferred taxation is the purposes in the prospective balance sheet.
assumed that DPF became a listed PIE
increase in the deferred tax liability No fair value adjustments other than
on 31 December 2012 and was taxed as if
associated with the termination of recognition of goodwill have been
it were a listed PIE for the forecast period.
DPF’s derivative financial instruments assumed. The net effect of the fair
Current and deferred taxation have then immediately prior to the Merger (see the value adjustments results in prospective
been calculated for PFI, DPF, and the assumptions regarding interest expense goodwill of $9.761 million arising from
Merged Group applying current Inland and bank fees). the Merger.
Revenue rules and regulations.
A full description of the tax implications The actual fair values of the identifiable
The effective current tax rate (being of the Merger is set out on pages 43 to 44 assets and liabilities and shares issued at
current taxation divided by total of this Information Memorandum. the Merger Date, together with the
operating earnings) is 22% for PFI, 18% resulting goodwill, could differ from the
for DPF and 21% for the Merged Group. Goodwill estimates shown as at 31 December 2013.
At the Merger Date, in accordance with
PFI made a change to the way deferred As required by GAAP no amortisation of
NZ IFRS 3, the identifiable assets and
tax on depreciation claimed was goodwill is recognised in the prospective
liabilities of DPF (the “accounting
calculated during February 2013. This income statement. Subsequent to the
acquiree”) are required to be recognised
change was made in order to better match Merger Date, goodwill will be reviewed
in the financial statements of the Merged
the depreciation claw-back on disposals for impairment.
Group at their fair values. Goodwill in
to the deferred tax associated with these
relation to the DPF business will arise
properties. This exercise resulted in a

Investment Properties

As at 1 January 2013 382,180 420,030 - 802,210
Additions 14,603 - - 14,603
Disposals - (13,050) - (13,050)
Capital expenditure 3,562 8,427 - 11,989
Prepaid leasing costs, capitalised lease incentives and fixed

685 1,384 - 2,069
rent reviews
Unrealised revaluation 2,768 3,368 - 6,136
As at 31 December 2013 403,798 420,159 - 823,957
Represented in the statement of financial position by:
Prepayments and other assets1 7,371 4,464 - 11,835
Investment properties 396,427 415,695 - 812,122
As at 31 December 2013 403,798 420,159 - 823,957
Amount shown only represents a portion of the total balance in the statement of financial position, being prepaid leasing costs, capitalised lease incentives and fixed rent reviews.
1
PFI has assumed the acquisition of Prepaid leasing costs and capitalised lease The assessment of the Relevant Directors
30-32 Bowden Road for $14.6 million incentives assume the payment of leasing as at 31 December 2013 is based on the
which settled in March 2013. PFI has costs and the granting of lease incentives last current market valuation made by
also assumed the partial redevelopment associated with those properties that are independent registered public valuers.
15 Copsey Place for $1.3 million which assumed to be re-leased during the After allowing for capital expenditure,
is assumed to be redeveloped from prospective period, net of amortisation. prepaid leasing costs, capitalised lease
March 2013 to October 2013. Fixed rent review adjustments assumes incentives and fixed rent reviews, these
revenue booked as a result of fixed rent valuations have been adjusted for forecast
DPF has assumed the disposal of 132
review accounting entries in respect of changes in occupancy, proximity to lease
Pavilion Drive for $7.9 million which
leases with fixed rent review mechanisms. expiry and rent reviews. The total uplift
settled in January 2013 and 89-91
for the prospective period is 0.7% for PFI
Captain Springs Road for $4.4 million The unrealised net change in fair value
and 0.8% for DPF.
which settled February 2013. DPF has of investment properties (unrealised
also assumed the development 124B revaluation) represents the adjustment Please refer also to page 69 for discussion
Hewletts Road for $7.8 million which is necessary to bring the value of investment of the sensitivity of this assumption.
assumed to be developed from January properties in line with the assessment
Investment properties for the Merged
2013 to June 2013. of the Relevant Directors as at 31
Group represent an aggregation of
December 2013.
No other acquisitions, disposals, or investment properties of PFI and DPF.
significant development or redevelopment
capital expenditure is assumed.
Borrowings

Borrowings 133,100 173,300 11,798 318,198
Loan-to-value ratio 33.0% 41.2% N/A 38.6%
Net interest cover 3.2 times 2.5 times N/A 3.2 times

Please refer to the assumptions regarding Sensitivity of significant Unrealised net change in fair value
interest expense and bank fees and assumptions of investment properties
unrealised net change in fair value of The total net change in the fair value of
derivative financial instruments. As noted Prospective financial information is investment properties for the prospective
in those sections, the Merged Group inherently subject to significant business, period for the Merged Group is 0.6% of
assumes that DPF’s derivative financial economic and competitive uncertainties the prior book value. Sensitivity of this
instruments are terminated immediately and contingencies and accordingly actual assumption is to increase or decrease the
prior to the Merger and the fair value of results are likely to vary from the total net change in net tangible assets
those derivatives, being $12.103 million, prospective financial information and (NTA) by +/- 1%. In the case of a 1%
is settled by drawing on bank facilities. variations may be material. increase, this results in an increase in net
The sensitivity analysis provided in the tangible assets from $1.18 to $1.20 cents
Share capital and dividends
following table demonstrates the potential per share (cps), or in the case of a 1%
Aside from the DPF dividend reinvestment impact of changes to key assumptions on decrease, this results in a decrease in
plan which operated during February the prospective distributable earnings and NTA from $1.18 to $1.16 cps. There is
2013, it has been assumed that each of PFI net tangible assets. no change to distributable profit as a
and DPF’s dividend reinvestment schemes result of these sensitivities.
and dividend reinvestment plans are Care should be taken in interpreting
suspended for the prospective period and this sensitivity analysis as changes in Interest expense and bank fees:
that the Merged Group does not operate a a specific assumption are analysed in BKBM (float rates)
dividend reinvestment scheme. isolation to potential changes in other It has been assumed that BKBM (float
specific assumptions, whereas in many rates) will not change materially from
Under the Merger 191,091,663 shares in cases changes to several assumptions may
PFI will be issued to DPF Shareholders, current levels. Sensitivity of this
be interdependent having cumulative assumption is to increase or decrease
being a ratio of 123.21842 new PFI Shares or mitigating impacts. The sensitivity
per existing DPF Share. BKBM (float rates) by +/- 50 basis points
analysis does not take into account any (bps, 0.5%). In the case of a 50 bps
The merger adjustments of $5.795 potential mitigating actions that increase, this results in a decrease in
million represents the difference between management may take. Proportional distributable profit from 7.31 cps to 7.19
the fair value of the shares in PFI issued variation of the changes in specific cps, or in the case of a 50 bps decrease,
to DPF Shareholders (calculated as if the assumptions presented may not result this results in an increase in distributable
Merger had occurred on 31 December in proportional impacts on prospective profit from 7.31 cps to 7.42 cps. There is
2012 and PFI’s shares were trading at distributable earnings or prospective no significant change to net tangible
$1.24 on the date of issue) and the book net tangible assets. assets as a result of these sensitivities.
value of DPF’s share capital. The sensitivity analysis shows movements
Please refer also to the assumptions in the pro forma prospective distributable
regarding dividends in the Statutory earnings and/or net tangible assets for
Prospective Financial Information the year ending 31 December 2013 when
(Forecast FY13). each assumption is increased or decreased
as noted.
Management fees: incentive fee

It has been assumed that no incentive fee will be paid during the prospective period on the assumption that the Merged Group’s
share price trades at levels below those required to trigger the incentive fee.
Set out in the table below are the share prices at which an incentive fee payment would be triggered in a quarter, the share prices
required to trigger the maximum incentive fee in any given quarter without any carry forward, and the maximum incentive fee
payable (net of tax) in any given quarter without any carry forward.
Share price to trigger the Maximum incentive fee payable

Share price to trigger an maximum incentive fee without (net of tax) without any
Quarter ended incentive fee payment any carry forward carry forward
30 June 2013 1.316 1.333 484,050
30 September 2013 1.327 1.360 493,609
31 December 2013 1.336 1.387 503,647
The total impact on pro forma prospective distributable profit of the payment of the maximum incentive fees payable (net of tax)
without any carry forward is a reduction of 0.36 cps to 6.95 cps. There is no change to net tangible assets as a result of this sensitivity.
42
STATUTORY PROSPECTIVE
FINANCIAL INFORMATION
(Forecast FY13)
This section contains the prospective financial information for PFI assuming
the Merger completes on 1 July 2013 as anticipated (Statutory Prospective
Financial Information, or “Forecast FY13”) which has been prepared to enable
future comparison against PFI’s actual NZ GAAP financial results that will be
prepared for the year ending 31 December 2013. This assumes the Merger occurs
on 1 July 2013, and hence includes six months trading for DPF from the date of
Merger, and a full year’s trading for PFI.
This Forecast FY13 for the Merged Group, includes:
Prospective consolidated statement of comprehensive income,

prospective consolidated balance sheet, prospective consolidated
statement of changes in equity and prospective consolidated
statement of cash flows.
In this section, the assumptions and accounting policies adopted
are as set out in the Pro Forma FY13 on pages 64 to 69 and 76
unless otherwise stated.

Statutory Prospective Consolidated
Statement of Comprehensive Income
All figures in $000’s
OPERATING REVENUE
Rental income 48,001
Interest income 3
Total operating revenue 48,004
OPERATING EXPENSES
Audit fees and other fees paid to auditors for agreed upon procedures engagements 75
Directors’ fees 230
Interest expense and bank fees 13,030
Management fees 3,403
Non-recoverable property costs 1,447
Other expenses 1,618
Total operating expenses 19,803
Total operating earnings 28,201
NON OPERATING INCOME AND EXPENSES

Unrealised net change in fair value of investment properties 6,136
Unrealised net change in fair value of derivative financial instruments 2,990
Total non operating income and expenses 9,126
Profit before taxation 37,327
TAXATION
Current taxation 6,159
Deferred taxation (1,657)
Total taxation 4,502
Profit for the period attributable to the shareholders 32,825

Other comprehensive income -
Total comprehensive income for the year attributable to the shareholders 32,825

Statement of Changes in Equity
SHARE CAPITAL
Balance as at 1 January 2013 171,471
Share issues 236,643
Share capital as at 31 December 2013 408,114
RETAINED EARNINGS
Balance as at 1 January 2013 78,613
Profit/(loss) for the year 32,825
Other comprehensive income -
Dividends to shareholders (18,831)
Retained earnings as at 31 December 2013 92,607
Total equity as at 31 December 2013 500,721

Statement of Financial Position
As at 31 December 2013
CURRENT ASSETS
Bank 94
Accounts receivable 748
Prepayments and other assets 2,641
Total current assets 3,483
NON-CURRENT ASSETS
Goodwill 9,254
Prepayments and other assets 9,956
Investment properties 812,122
Total non-current assets 831,332
Total assets 834,815
CURRENT LIABILITIES
Accounts payable, accruals and other liabilities 3,525
Taxation payable 2,359
Derivative financial instruments 5,107
Total current liabilities 10,991
NON-CURRENT LIABILITIES
Borrowings 313,803
Deferred taxation 9,300
Total non-current liabilities 323,103
Total liabilities 334,094
Net assets 500,721
OWNERS’ EQUITY
Share capital 408,114
Retained earnings 92,607
Total equity 500,721

Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 46,542
Payments to suppliers (7,794)
Interest received 3
Interest and other finance costs paid (13,182)
Income tax paid (4,891)
Net cash flows from operating activities 20,678
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases and development of investment properties (18,709)
Net cash flows from investing activities (18,709)
CASH FLOWS FROM FINANCING ACTIVITIES

Distributions to shareholders (18,831)
Proceeds from term loans 28,300
Repayments to term loans (11,600)
Cash acquired from business combination 85
Net cash flows from financing activities (2,046)
Net change in cash and cash equivalents (77)

Cash and cash equivalents at beginning of period 171
Cash and cash equivalents at end of period 94

Statutory Prospective Distributable Profit Per Share
Calculations (Non-GAAP Financial Information)
Total comprehensive income for the year attributable to the shareholders 32,825
Less: Unrealised net change in fair value of investment properties (6,136)
Less: Losses/(gains) on disposals of investment properties -
Plus: Tax on depreciation claw-back on disposals of investment properties -
Less: Unrealised net change in fair value of derivative financial instruments (2,990)
Less: Deferred taxation (1,657)
Less: Fixed rent reviews (387)
Plus: Transaction costs 941
Less: Other (11)
Total distributable profit 22,585
Shares on issue 315,956,559
Distributable profit per share (cents per share) 7.04 43
Amount represents the sum of distributable profit divided by shares on issue on a quarter by quarter basis. Please refer to the assumptions regarding dividends for the amounts on a quarter by
43
quarter basis.

Notes to the Statutory Prospective
Financial Information
(Forecast FY13)
Specific assumptions • DPF’s derivative financial instruments Transaction costs

are terminated immediately prior to the It is assumed that PFI expenses its share
Set out below are specific assumptions Merger on 28 June 2013, and the
that differ from those adopted for the of the estimated transaction costs
forecast fair value of $9.357 million is associated with the Merger.
Pro Forma FY13. settled by drawing on bank facilities;
Merger • The current and deferred taxation
The Merger is effective 1 July 2013, charges reflect the reduced impact
which has the following impacts on the of the derivative financial instrument
Forecast FY13: termination noted above.
• Fair value, for the purposes of

calculating goodwill, is measured
as at that date;
Dividend
It is assumed that the following net dividends are paid:
Dividend in respect PFI / Merged Group DPF payment

of the quarter ended payment amount and date amount and date
1.70 cents per share
$2.12 per share, paid
31 March 2013 (cps), to be paid
15 May 2013
29 May 2013
1.65 cps, to be paid $2.11 per share, to be

30 June 2013
28 June 2013 paid 28 June 2013
1.79 cps, to be paid

30 September 2013 N/A
27 November 2013
1.90 cps, to be paid

31 December 2013 N/A
on 12 March 2014

RECONCILIATION OF STATUTORY PROSPECTIVE FINANCIAL
INFORMATION (Forecast FY13) TO MERGER PRO FORMA PROSPECTIVE
FINANCIAL INFORMATION (Pro Forma FY13)
Reconciliation of Net Assets
Merged
All figures in $000’s Group
Net assets as per Pro Forma FY13 as at 31 December 2013 496,538

Net assets as per Forecast FY13 as at 31 December 2013 500,721
Difference (4,183)
Represented by:
DPF’s comprehensive income for the six months ending 30 June 2013 included in Pro Forma FY13
7,743
but not in the Forecast FY13
Higher dividends assumed in Pro Forma FY13 as compared with the Forecast FY13 (10,985)
DPF’s share of the transaction costs are excluded in the Forecast FY13 whereas FY13 Pro Forma
(941)
assumes all transaction costs affect opening Net Assets
Total (4,183)
Reconciliation of Distributable Profit
Merged
All figures in $000’s Group
Distributable profit as per Pro Forma FY13 as at 31 December 2013 30,071

Distributable profit as per Forecast FY13 as at 31 December 2013 22,585
Difference (7,486)
Represented by:
Pro Forma FY13 includes DPF’s distributable profit for the six months ending 30 June 2013 (6,550)
Pro Forma FY13 includes 12 months of lower interest rates as a result of treasury initiatives whereas
(880)
Forecast FY13 includes 6 months at lower interest rates as a result of treasury initiatives (net of current tax)
Other (56)
Total (7,486)

KPMG INVESTIGATING ACCOUNTANT REPORT
The Directors
Property For Industry Limited
The Directors
Direct Property Fund Limited
22 May 2013
Dear Directors
Investigating Accountant’s limited assurance report on the Merger Pro Forma Prospective Financial Information and the Statutory
Prospective Financial Information (together the “Prospective Financial Information”) for inclusion in the Information Memorandum
This report has been prepared by KPMG in accordance with the terms of our engagement letter dated 19 March 2013 at the request of the directors
of Property For Industry Limited and the directors of Direct Property Fund Limited (together, “the Addressees”) for inclusion in the combined
Notices of Meeting and Information Memorandum to be dated on or about 22 May 2013 (“Information Memorandum”).
References to defined words and other terminology used in this report have the same meaning as set out in the Glossary to the Information
Memorandum.
Directors responsibilities
The relevant Directors (being the PFI directors for information relating to PFI and Merged Group and the DPF directors for information relating
to DPF) are responsible for the preparation and presentation of the Prospective Financial Information, including the assumptions based on best
information that are reasonable and supportable (as required in FRS-42 Prospective Financial Information issued by the New Zealand Institute of
Chartered Accountants), on which the Prospective Financial Information is based.
KPMG responsibilities and scope of work
Our responsibility is to perform a limited assurance engagement as described below and to express a conclusion based on the results of our work.
We have conducted our work in accordance with International Standard on Assurance Engagements (New Zealand) 3000 Assurance Engagements
other than Audits or Reviews of Historical Financial information issued by the Council of the New Zealand Institute of Chartered Accountants.
Our procedures consisted primarily of enquiry, discussion and comparison and other such analytical review procedures we considered necessary so
as to provide limited assurance as to whether anything has come to our attention that causes us to believe that the assumptions set in section 6 of the
Information Memorandum, do not provide, in all material respects, reasonable and supportable basis for the Prospective Financial Information (as
required in FRS-42) or that the Prospective Financial Information is unreasonable.
The procedures selected depend on our understanding of the Prospective Financial Information, the DPF and PFI business plans, identified key
assumptions, and our consideration of areas where material misstatements are likely to arise. Our procedures covered the reconciliations set out on
pages 63 and 75.
Other than as mentioned above, the scope of this engagement has not extended to performing any procedures by way of audit, review or verification
of the underlying records or other sources from which the amounts included in the Prospective Financial Information were extracted.
Our conclusion
Based on our analysis of the Prospective Financial Information and the relevant Directors’ assumptions, which is not an audit, nothing has come to
our attention that causes us to believe that the relevant Directors’ assumptions set out in Section 6 of the Information Memorandum, which are
subject to the risks set out in Section 4 of the Information Memorandum, do not provide, in all material respects, a reasonable and supportable basis
for the Prospective Financial Information (as required in FRS 42) or that the Prospective Financial Information is unreasonable.
Actual results during the forecast period may vary materially from the Prospective Financial Information, as it is often the case that some events
and circumstances do not occur as expected, or are not anticipated. We do not confirm, guarantee or express an opinion as to whether the actual
results will approximate those forecast because assumptions regarding future events, by their nature, are not capable of independent substantiation.
We completed the procedures on 22 May 2013 and our findings are reported as at that date.
Restriction on use of our report
This report is made solely to the Addressees for inclusion in the Information Memorandum. To the fullest extent permitted by law and subject to
section 61 of the Securities Act 1978 we do not accept or assume responsibility to anyone other than the Addressees of this report for the
conclusions that we have formed.
We disclaim any assumption of responsibility for reliance on this report or the amounts included in the Prospective Financial Information for any
other purpose other than that for which they were prepared. In addition, we take no responsibility for, nor do we report on, any part of the
Information Memorandum not specifically mentioned in this report.
Independence or disclosure of interest
KPMG New Zealand does not have any interest in the outcome of the Merger other than the preparation of this Report and participation in due
diligence in connection with the Information Memorandum for which normal professional fees will be received. We have also provided taxation
advice to both PFI and DPF, both ongoing and specifically in relation to the Merger. This has not impaired our independence.
KPMG has given, and has not, before delivery of a copy of the Information Memorandum for registration in accordance with section 41 of the
Securities Act 1978, withdrawn its written consent to the distribution of the Information Memorandum with this report included in the form and
context in which it is included.
KPMG

SECTION
ADDITIONAL
INFORMATION
Performing
togEther
Transportation Auckland Corporation, 170 Swanson Road, Swanson, Auckland ADDITIONAL INFORMATION 79
Additional
Information
Names, addresses and other Experts and underwriter CBRE Limited’s address is:
information The Merger is not underwritten. Level 12
The following experts are named in ASB Tower
Issuer 2 Hunter Street
this Information Memorandum:
The issuer of the shares to be issued to P O Box 5053
DPF Shareholders under the Merger is Deloitte Wellington 6011
Property For Industry Limited (PFI). The Independent Expert Report has been
PFI’s registered office is: prepared by Deloitte, Chartered Colliers International
Accountants. New Zealand Limited
Shed 24
Prince’s Wharf Certain valuation figures (as set out
Deloitte’s address is set out in the below) have been provided by Russell
147 Quay Street Directory.
Auckland 1010 Clark, Leo Lee and Mark Parlane of
New Zealand Colliers International New Zealand
KPMG
Limited. Their qualifications are:
Directors The Investigating Accountant Report has
been prepared by KPMG, Chartered • Russell Clark: BCom (VPM), MPINZ
As at the date of this Information Accountants.
Memorandum, PFI’s directors are: • Leo Lee: BCom, BProp
KPMG’s address is set out in the Directory. • Mark Parlane: BBS (VPM), ANZIV,
Peter Hanbury Masfen
Humphry John Davy Rolleston SPINZ
PwC
Anthony Montgomery Beverley Colliers International New Zealand
The Independent Appraisal Report
Gregory John Reidy Limited’s address is:
has been prepared by
Further information about the proposed PricewaterhouseCoopers, Level 27
directors of PFI upon completion of Chartered Accountants. 151 Queen Street
the Merger, and executive team, is set PO Box 1631
PwC’s address is set out in the Directory.
out in Section 5 of this Information Auckland 1140
Memorandum. CBRE Limited
Jones Lang LaSalle Limited
Promoters Certain valuation figures (as set out
below) have been provided by David Certain valuation figures (as set out
For the purposes of the Securities Act below) have been provided by Dave
Woolley, Shaun Jackkson, Gareth
and the Securities Regulations, DPF, Wigmore, Arthur Harris, William
Strawbridge, Patrick Ryan, Andrew
DPFM and each of DPF’s and DPFM’s Hickey, Nigel Fenwick and Lance
Muller, Marius Ogg, Phillip Diggelmann,
directors (other than those directors who Collings of Jones Lang LaSalle Limited.
Wouter Robberts, Scott Ansley, Jamahl
are also directors of PFI, as the issuer), Their qualifications are:
Williams and Todd Sanford of CBRE
being Arthur William Young, John
Limited. Their qualifications are: • Dave Wigmore: BPA, ANZIV, SPINZ
Anthony Waller, Simon John Bufton and
Malcolm John Lambert McDougall are • David Woolley: BBS (VPM), MPINZ • Arthur Harris: BSc, BPA, DipMan,
promoters of the Merger. and ANZIV DipBus (Fin)
The registered office and principal place • Shaun Jackson: BPA, SPINZ and • William Hickey: BProp, BCom,
of business of both DPF and DPFM is: ANZIV MPINZ, ANZIV
Shed 24 • Gareth Strawbridge: BProp • Nigel Fenwick: BBS (VPM)
Prince’s Wharf
147 Quay Street • Patrick Ryan: SPINZ, ANZIV • Lance Collings: SPINZ, ANZIV
Auckland 1010 • Andrew Muller: BCom (VPM), PINZ Jones Lang LaSalle Limited’s address is:
New Zealand
• Marius Ogg: ANZIV, SPINZ Level 16
Directors or associated persons to • Phillip Diggelmann: BCom (VPM) PwC Tower
whom PFI Shares are issued 188 Quay Street
Under the Merger, PFI Shares will be • Wouter Robberts: MPINZ, ANZIV PO Box 165
issued to all DPF Shareholders, including • Scott Ansley: ANZIV, MPINZ Auckland 1140
DPFM, who is an associated person of
Gregory Reidy (a director of PFI). • Jamahl Williams: BBS (VPM),
ANZIV, SPINZ
• Todd Sanford: BProp (Hons), MPINZ
80 ADDITIONAL INFORMATION
Each of Deloitte, KPMG, PwC, CBRE Valuers The methods of valuation used, by
Limited, Colliers International each of the above valuers, were the
New Zealand Limited and Jones Lang CBRE Limited capitalisation approach and the
LaSalle Limited as experts, have given Patrick Ryan and Andrew Muller of discounted cash flow approach.
their consent and have not withdrawn CBRE Limited have, as at 31 December
their consent before delivery of this 2012, prepared the valuations set out Colliers International
Information Memorandum for in Section 3 of this Information New Zealand Limited
registration under section 41 of the Memorandum in respect of the properties Russell Clark and Leo Lee of Colliers
Securities Act to the distribution of this owned by PFI at 50 Carbine Road, 174b International New Zealand Limited have
Information Memorandum with the Marua Road, 102 Mays Road, 4-6 Mt prepared the valuations set out in Section
inclusion of the statements attributed to Richmond Drive, 686 Rosebank Road 3 of this Information Memorandum in
each of those experts in this Information and 61-69 Patiki Road. respect of the following properties:
Memorandum in the form and context in
which they are included. Wouter Robberts of CBRE Limited has, • PFI properties (as at 31 December
as at 31 December 2012, prepared the 2012): 15 Copsey Place, 8 Hugo
Neither Deloitte, KPMG, PwC, CBRE valuations set out in Section 3 of this Johnston Drive, 12 Hugo Johnston
Limited, Colliers International Information Memorandum in respect of Drive, 509 Mt Wellington Highway,
New Zealand Limited nor Jones Lang the properties owned by PFI at 511 Mt 320 Rosebank Road, 322 Rosedale
LaSalle Limited, nor any director, officer Wellington Highway, 515 Mt Wellington Road and 326 Rosebank Road.
or employee of either of them, is or is Highway, 523 Mt Wellington Highway,
intended to be, a director, officer or • DPF properties (as at 31 March 2013):
9 Nesdale Avenue, 58 Richard Pearse 122 Captain Springs Road, 43
employee of PFI. Drive, 5 Vestey Drive, 7 Vestey Drive, Cryers/63 Neales/29 Carpenters Road,
Deloitte and KPMG have provided, and 9 Vestey Drive, 11 Vestey Drive and 6-8 Greenmount Drive, 15 Jomac
may in the future provide, professional 15a Vestey Drive. Place, 312 Nielson Street, 314 Nielson
advisory services to PFI. Further, CBRE Jamahl Williams and Todd Sanford of Street, 2 Pacific Rise, 18 Ron Driver
Limited, Colliers International CBRE Limited have, as at 31 December Place, 78 Springs Road, 23 Zelanian
New Zealand Limited and Jones Lang 2012, prepared the valuation set out Drive and 27 Zelanian Drive.
LaSalle Limited have provided, and may in Section 3 of this Information
in the future provide, valuation services Russell Clark of Colliers International
Memorandum in respect of the properties New Zealand Limited has, as at 31
to PFI. owned by PFI at 36 Neales Road, 1 Ron March 2013, prepared the valuation
The appointment of PwC as Independent Driver Place and 41 William Pickering set out in Section 3 of this Information
Appraiser to assess the fairness of the Drive. Memorandum in respect of the property
proposed changes to PFI’s Management Marius Ogg and Phillip Diggelmann owned by DPF at 229 Dairy Flat Highway.
Agreement was approved by NZX of CBRE Limited have, as at 31
Regulation on 20 March 2013. PwC has Mark Parlane of Colliers International
December 2012, prepared the valuation New Zealand Limited has, as at 31 March
not undertaken any work for PFI, PFI’s set out in Section 3 of this Information
Manager, DPF or DPF’s Manager within 2013, prepared the valuations set out
Memorandum in respect of the property in Section 3 of this Information
the last three years, and (other than owned by PFI at 44 Mandeville Street.
providing the Independent Appraisal Memorandum in respect of the properties
Report) is not currently providing any Scott Ansley of CBRE Limited has, owned by DPF at 47 Dalgety Drive, 59
professional services to such persons. as at 31 December 2012, prepared the Dalgety Drive, 124 Hewletts Road, 124A
PwC may in the future provide valuation set out in Section 3 of this Hewletts Road, 124B Hewletts Road, 3
professional advisory services to PFI. Information Memorandum in respect Hocking Street and 1 Mayo Road.
of the property owned by PFI at 8A & The methods of valuation used, by
8B Canada Crescent. each of the above valuers, were the
David Woolley and Shaun Jackson of capitalisation approach and the
CBRE Limited have, as at 31 March discounted cash flow approach.
2013, prepared the valuation set out in
Section 3 of this Information
Memorandum in respect of the property
owned by DPF at the Carlaw Gateway
Precinct (15 Nicholls Lane).
David Woolley and Gareth Strawbridge
of CBRE Limited have, as at 31 March
2013, prepared the valuation set out
in Section 3 of this Information
Memorandum in respect of the property
owned by DPF at the Carlaw Commercial
Precinct (12-16 Nicholls Lane).
ADDITIONAL INFORMATION 81
Jones Lang LaSalle Limited Each of the Valuers has no: Relationship with listed securities
William Hickey and Arthur Harris • relationship with PFI (other than as The PFI Shares to be issued on
of Jones Lang LaSalle Limited have a valuer) nor interest in PFI or any completion of the Merger are of the
prepared the valuations set out in Section associated person of PFI; same class as existing, previously issued,
3 of this Information Memorandum in ordinary shares of PFI that are quoted
respect of the following properties: • interest in the properties that it has
valued (except Patrick Ryan, who is on the NZX Main Board under the code
• PFI properties (as at 31 December a shareholder of DPF); or “PFI”. As such, the PFI Shares offered
2012): 17 Allens Road, 47 Arrenway pursuant to the Merger will be fully paid
Drive, 54 Carbine Road & 6a Donnor • relationship with any other person who and rank pari passu (equally) in all respects,
Place, 76 Carbine Road, 7 Carmont has a material interest in the properties including as to distributions and voting,
Place, 212 Cavendish Drive, 85 that it has valued. with other fully paid existing PFI Shares.
Cavendish Drive, 6 Donnor Place, Each PFI Share will confer on the holder
16 Hugo Johnston Drive, 1 Niall Affirmation of valuation figures
the rights described in the PFI
Burgess Road, 2-6 Niall Burgess Road, Each of the Valuers has affirmed each of
Constitution (which may be amended
3-5 Niall Burgess Road, 7-9 Niall their respective valuation figures that are
from time to time) and as provided for
Burgess Road, 10 Niall Burgess Road, set out in Section 3 of this Information
in the Companies Act including the right
19 Omega Street, 48 Seaview Road, Memorandum and has consented to the
to receive notices of, attend and vote on a
170 Swanson Road, 36 Vestey Drive inclusion of this statement of affirmation.
poll or any resolution of shareholders.
and 127 Waterloo Road. DPF Shareholders who are issued PFI
• DPF properties (as at 31 March 2013): Terms of the Offer and Securities Shares will be bound by the PFI
2-4 Argus Place, 51 Arrenway Drive, The securities being offered to DPF Constitution and the terms of the Merger
92-98 Harris Road, 9 Narek Place, 306 Shareholders under the Merger are as set out in this Information
Neilson Street, 15 Omega Street, 12 ordinary shares in PFI. Those securities Memorandum. A copy of the PFI
Southpark Place, 10c Stonedon Drive, are only being offered to DPF Constitution is filed at the Companies
558 Te Rapa Road and 12 Zelanian Shareholders and are not otherwise Office of the Ministry of Economic and
Drive. available for application by members Development and is available for public
of the public. inspection (including at www.business.
Dave Wigmore and Arthur Harris of govt.nz/companies).
Jones Lang LaSalle Limited have, as at The number of securities being offered
31 March 2013, prepared the valuations (and therefore the maximum number of DPF Shareholders will receive 123.218 44
set out in Section 3 of this Information securities being offered as required to be PFI Shares for every DPF Share held,
Memorandum in respect of the properties stated by Schedule 10 of the Securities which DPF Shares will be cancelled.
owned by DPF at 5 Cable Street and Regulations) is 191,091,663 PFI Shares. There is no relationship between the
23 Cable Street. consideration to be provided by DPF
The PFI Shares allotted to DPF Shareholders under the Merger and the
Nigel Fenwick and Arthur Harris of Jones Shareholders under the Merger will be market price of PFI Shares as the
Lang LaSalle Limited have, as at 31 issued in consideration of the cancellation exchange ratio has already been set.
December 2012, prepared the valuations of the DPF Shares on completion of the The exchange ratio is described on page
set out in Section 3 of this Information Merger. DPF Shareholders will not be 23 of this Information Memorandum.
Memorandum in respect of the properties required to apply, pay or send any money,
owned by PFI at 8 McCormack Place and for the new PFI Shares to be allotted to The market price of PFI Shares quoted
50 Parkside Road. them under the Merger. on the NZX Main Board may change
between the date of the offer and the date
Lance Collings of Jones Lang LaSalle when the ordinary shares are issued to
Limited has, as at 31 December 2012, DPF Shareholders. Any changes in
prepared the valuation set out in Section market value of the PFI Shares will not
3 of this Information Memorandum in affect the consideration for the PFI
respect of the property owned by PFI at Shares under the Merger (being the DPF
127 Waterloo Road. Shares), but will affect the market price
The methods of valuation used, by of PFI Shares that the DPF Shareholders
each of the above valuers, were the will receive.
capitalisation approach and the
discounted cash flow approach.
44
Sale of Minimum Holdings If the information PFI has notified to Copies of DPF’s 2012 Annual Report
NZX in accordance with the Listing and its previous Annual Reports:
The Listing Rules prescribe “minimum Rules is material to the offer of PFI
holdings” for shareholders of listed • are filed on a public register at the
Shares and such information is
companies. The amount of the minimum Companies Office of the Ministry
misleading in the context of the offer of
holding is dependent on PFI’s share price. of Economic Development and are
PFI Shares, PFI will correct or update
For example, if the share price exceeds available for public inspection
such information by notifying NZX.
$1.00 but does not exceed $2.00, the (including at www.business.govt.nz/
minimum holding would be 200 shares. PFI is not aware of any material companies); and
information that is not generally available
PFI’s constitution and the Listing • along with DPF’s Interim Reports,
to the market, that PFI is not required to
Rules permit PFI’s board to sell a PFI may be obtained, free of charge, from
notify to NZX in accordance with the
Shareholders’ shares if the number of DPF by visiting DPF’s website at
Listing Rules, which is likely to assist a
shares they hold is less than the minimum www.directproperty.co.nz, or
prudent but non-expert person to make
holding set out in the Listing Rules. by making a request during
a decision in respect of the Merger.
Where the Board wishes to exercise that normal business hours at DPF’s
power, they must give a PFI Shareholder registered office.
three months’ notice of their intention. Financial Statements
A PFI Shareholder may, in that three The latest audited financial statements Directors’ statement
months, acquire sufficient PFI Shares for the PFI Group for the financial year
so that they hold the required minimum In the opinion of PFI’s directors,
ended 31 December 2012 that comply
holding. after due enquiry by them, PFI is in
with, and have been registered under,
compliance with the requirements of
the Financial Reporting Act 1993 are
the continuous disclosure provisions
Information available under PFI’s contained in PFI’s 2012 Annual Report
that apply to PFI.
disclosure obligations which has been sent to PFI Shareholders.
Those financial statements were
From time to time, PFI provides registered at the Companies Office on
information to NZX in accordance 15 April 2013 and notified to NZX on 18
with its disclosure obligations under the February 2013, which together with PFI’s
Listing Rules. Annual Reports for preceding financial
PFI has notified the following information years, are also available on PFI’s website
to NZX, on or after the date on which the at www.pfi.co.nz.
latest financial statements were notified
to NZX, that is material to the offer of Access to information
PFI Shares: and statements
Copies of the information disclosed above
Date Information
under the heading “Information available
Director under PFI’s disclosure obligations” and
15 May 2013
Nominations for PFI PFI’s 2012 Annual Report:
Update on Merger • are filed on a public register at the
8 May 2013
Proposal Companies Office of the Ministry
of Economic Development and are
PFI’s First Quarter available for public inspection
6 May 2013
Dividend
(including at www.business.govt.nz/
15 April 2013 Merger Proposal companies); and
• may be obtained, free of charge,
27 March 2013 2012 Annual Report
from PFI by visiting PFI’s website at
Portfolio Value Rises www.pfi.co.nz, or by making a request
18 February 2013 3.3%; Annual Profit during normal business hours at
Rises to $26.9m PFI’s registered office.
ADDITIONAL INFORMATION 83
Signatures Required
under the Securities Act
A copy of this Information Memorandum has been signed
by each director of PFI (or his or her agent authorised in
writing) as issuer, and by each Promoter, being DPF and
DPFM and each director of DPF and DPFM.
Directors of Property Directors of Direct

For Industry Limited: Property Fund Limited
Peter Hanbury Masfen Arthur William Young
Humphry John Davy Rolleston John Anthony Waller
Anthony Montgomery Beverley Simon John Bufton
Gregory John Reidy Gregory John Reidy
Signed for and on behalf of Direct Property Fund Limited By:
Arthur William Young
Signed for and on behalf of DPF Management Limited By:
Gregory John Reidy
Director of DPF
Management Limited
(who is not also a director of PFI or DPF):
Malcolm John Lambert McDougall
SECTION
SCHEME PLAN,
OBJECTION RIGHTS +
COURT DOCUMENTS
Focused
TOGETHER
Multispares, 48 Seaview Road, Seaview, Wellington SCHEME PLAN, OBJECTION RIGHTS + COURT DOCUMENTS 85
SCHEME
PLAN
SCHEME PLAN FOR THE Final Court Orders means the final
orders of the Court in accordance
(d) The singular includes the
plural and vice versa.
MERGER OF PROPERTY with sections 236(1) and 237(1) of
the Companies Act to implement the (e) References to dates and times
FOR INDUSTRY LIMITED Scheme of Arrangement. are to dates and times in
New Zealand.
AND DIRECT PROPERTY Merger means the merger of PFI and
DPF in accordance with this Scheme (f) References to currency are to
FUND LIMITED Plan. New Zealand currency.
Date: 22 May 2013 PFI Shares means ordinary shares in (g) A reference to a “person”
PFI, each of which shall confer on includes an individual, firm,
company, corporation or
BACKGROUND the holder all of the rights set out in
unincorporated body of persons,
section 36(1) of the Companies Act
This Scheme Plan, subject to the granting and the Constitution. or government body, in each case
of Final Court Orders, sets out the steps whether or not having separate
to effect the merger of Property For Scheme Plan means this Scheme Plan. legal personality, and a reference
Industry Limited (PFI) and Direct to a person is a reference also to
Scheme of Arrangement means the
Property Fund Limited (DPF) by way that person’s successors.
scheme of arrangement and
of a scheme of arrangement under amalgamation to be undertaken (h) A reference to a statute or other
Part 15 of the Companies Act 1993. under Part 15 of the Companies Act law includes regulations and
in accordance with clause 2 of this other instruments under it and
1 INTERPRETATION Scheme Plan, subject to any consolidations, amendments,
1.1 Definitions amendment or variation made in re-enactments or replacements
accordance with this Scheme Plan. of any of them.
In this Scheme Plan:
Share Registrar means (i) Terms not defined in this
Applicants mean PFI and DPF, and Computershare Investor Services Scheme Plan, have the meaning
Applicant means any one of them. Limited. given to them in the information
business day means any day other memorandum of which this
Special Meeting means the meeting of
than a Saturday, Sunday, public Scheme Plan forms part.
DPF members or the meeting of PFI
holiday in New Zealand or a day members (as the case may be), and
on which banks are not open for 1.3 Time of the essence
any adjournment of that meeting, to
over-the-counter business in be held to consider, and if thought fit Time will be of the essence as
Auckland. approve, (among other things) the regards the performance of each
Companies Act means the Companies Merger. matter or thing provided for in this
Act 1993. Scheme Plan.
1.2 Interpretation:
Constitution means the constitution 2 SCHEME OF ARRANGEMENT
In this Scheme Plan, unless the
of PFI as at the date of this Scheme 2.1 From the date on which the Final
context otherwise requires:
Plan. Court Orders are granted until the
(a) The division of this Scheme Plan Effective Time, no Applicant may
Court means the High Court of
into clauses and the inclusion of (except with the prior written
New Zealand.
headings are for convenience of approval of the other Applicant):
DPF Shares means all of the shares reference only and do not affect
on issue in DPF as at the Effective the construction or interpretation (a) change its capital structure
Time. of this Scheme Plan. (whether by way of share issue,
dividend reinvestment, buy-
DPF Shareholders means the holders (b) References to clauses and back, cancellation, sub-division,
of the DPF Shares as recorded on the schedules are to clauses and consolidation or otherwise);
DPF share register at the Effective schedules of this Scheme Plan,
Time. and references to paragraphs (b) declare or pay any distribution
within a Schedule are to (other than in respect of the
Effective Date means 1 July 2013, or financial quarter ending 30 June
paragraphs within that Schedule,
such later date as the Applicants may 2013 in respect of which both
unless specifically stated
agree in writing. PFI and DPF intend to declare
otherwise.
Effective Time means 12.01am on the a dividend on a basis consistent
(c) Words importing one gender with its usual practice but with
Effective Date, or such later time as
include the other gender. a record date and a payment date
the Applicants may agree in writing.
on or before 30 June 2013); or
86 SCHEME PLAN, OBJECTION RIGHTS + COURT DOCUMENTS

(c) enter into, or agree to enter into, (b) PFI will continue as the 2.4 Within 10 business days of the
a major transaction (as that term amalgamated company with the Final Court Orders being made by
is defined in section 129 of the name “Property For Industry the Court, PFI will cause the Final
Companies Act). Limited” and with a registered Court Orders made by the Court
office and address for service at to be delivered to the Registrar
2.2 At the Effective Time, PFI and DPF Shed 24, Prince’s Wharf, 147
will amalgamate, with PFI of Companies for registration in
Quay Street, Auckland 1010, accordance with section 237(2)
continuing as the amalgamated
New Zealand; of the Companies Act.
company, with the effect that:
(a) the DPF Shares will convert into
(c) the Constitution will remain the 2.5 The amalgamation under the
constitution of PFI as the Scheme of Arrangement will become
PFI Shares on the basis that each
amalgamated company; effective on the basis that PFI is the
DPF Shareholder will receive
that number of PFI Shares equal (d) the directors of the amalgamated amalgamated company, and section
to C (and PFI will issue those company will be: 225A of the Companies Act will
shares to the DPF Shareholders), apply as if the amalgamation had
Peter Hanbury Masfen been effected pursuant to Part 13
where:
23 Bridgewater Road, Parnell, of the Companies Act.
C = S * R Auckland 1052
2.6 As soon as practicable following the
S = the number of DPF Shares Humphry John Davy Rolleston Effective Time, the Registrar of
held by that DPF 6 Wood Lane, Fendalton, Companies will:
Shareholder as at the Christchurch 8014
Effective Time (a) issue a certificate of
Anthony Montgomery Beverley amalgamation evidencing the
R = 123.2180084 (being the 45 Lookout Road, Hataitai, amalgamation of PFI and DPF
agreed merger ratio) Wellington 6021 pursuant to the Scheme of
Arrangement, with PFI
For this purpose, C will be Arthur William Young
continuing as the amalgamated
rounded down to the nearest 8 Wanganella Street,
company, with effect from the
whole number. If, following the Birkenhead, Auckland
Effective Date; and
application of the above
John Anthony Waller
methodology and rounding, less (b) remove DPF from the register
11 Maungakiekie Avenue,
than 191,091,663 PFI Shares of companies.
Greenlane, Auckland 1051
have been allotted by PFI to the
DPF Shareholders, those DPF Gregory John Reidy 3 AMENDMENT
Shareholders whose fractional 25 St Andrews Road, Epsom, 3.1 The Applicants reserve the right to
entitlement to an additional PFI Auckland 1023 amend, modify and/or supplement
Share prior to rounding were this Scheme Plan at any time and
closest to the nearest whole share (e) PFI will succeed to all the
property, rights, powers and from time to time, provided that any
will be allotted one additional such amendment, modification or
PFI Share until 191,091,663 PFI privileges of DPF;
supplement is approved by the Court
Shares have been allotted to DPF (f) PFI will succeed to all the and communicated to the applicable
Shareholders (provided that if liabilities and obligations of shareholders in the manner required
two or more DPF Shareholders DPF; by the Court (if so required).
have the same fractional
entitlement and the allotment of (g) proceedings pending by, or 3.2 Any amendment, modification or
one additional PFI Share to each against, DPF may be continued supplement to this Scheme Plan shall
of those DPF Shareholders would by, or against, PFI; and be effective only if it is proposed,
result in more than 191,091,663 consented to in writing, by the
(h) a conviction, ruling, order or
PFI Shares being allotted to DPF Applicants.
judgment in favour of, or
Shareholders, then PFI will draw against, DPF may be enforced 3.3 Each Applicant reserves the right
lots on behalf of those DPF by, or against, PFI. to withdraw this Scheme Plan at any
Shareholders to determine which time prior to the Effective Time by
of those DPF Shareholders will 2.3 As soon as reasonably practicable
following the Effective Date, PFI will giving written notice to the other
be allotted one additional PFI Applicant, in which case this Scheme
Share so that exactly 191,091,663 cause the Share Registrar to forward
(or cause to be forwarded) by mail to Plan shall cease to have any force
PFI Shares are allotted to DPF or effect.
Shareholders). each DPF Shareholder, at the address
specified in the DPF share register (as
applicable), a statement confirming
their holding of PFI Shares.
SCHEME PLAN, OBJECTION RIGHTS + COURT DOCUMENTS 87

OBJECTION
RIGHTS
Shareholders of PFI and DPF (the Final Court Orders (containing an address
Applicants) have the right to appear and for service), a notice of opposition, any
be heard at the hearing for the Final affidavits and a memorandum of
Court Orders in respect of the Scheme of submissions upon which that person
Arrangement. The Court makes the final intends to rely by 5.00 pm on 24 June
decision of whether or not to implement 2013 and on the same day serve
the Scheme of Arrangement which is the a copy on the Applicants at their address
final step in the Merger and can decide for service. The Applicants will serve
not to grant the Final Court Orders. If upon that person at their address for
the Merger is approved and proceeds, service a copy of the affidavits in support
then the Application for Final Court of the Application for Final Court Orders
Orders is expected to be considered by by 5.00 pm on 25 June 2013.
the Court on 26 June 2013.
The only persons entitled to appear and
Any shareholder who wishes to appear be heard at the hearing of the Application
and be heard on the Application for Final for Final Court Orders will be:
Court Orders must file a notice of
• the Applicants;
appearance or a notice of opposition
(both containing an address for service) • those shareholders of the Applicants
and, if they oppose the Application for who file a notice of appearance or a
Final Court Orders, any affidavits and a notice of opposition to the Application
memorandum of submissions on which for Final Court Orders in accordance
they intend to rely by 5.00 pm on 24 June with the above requirements; and
2013 and on the same day serve a copy on
the Applicants at their address for service. • those creditors or other persons (other
The Applicants will serve upon that than a shareholder of an Applicant)
shareholder, at their address for service, who claim to have an interest in the
a copy of the affidavits in support of the Scheme of Arrangement who file an
Application for Final Court Orders by application for leave to be heard and a
5.00 pm on 25 June 2013. notice of opposition to the Application
for Final Court Orders in accordance
In addition, any creditor of any Applicant with the above requirements and who
or any other person (other than a are subsequently granted leave to
shareholder of an Applicant) claiming appear and be heard at the hearing of
to have an interest in the Scheme of the Application for Final Court Orders.
Arrangement who wishes to appear and
be heard on the Application for Final Note that unless the Scheme of
Court Orders must file an application for Arrangement is approved and
leave to be heard on the Application for implemented, the Merger will
not proceed.
88 SCHEME PLAN, OBJECTION RIGHTS + COURT DOCUMENTS

COURT
DOCUMENTS
SCHEME PLAN, OBJECTION RIGHTS + COURT DOCUMENTS 89

95
104 Trayco Manufacturing, 3 Hocking Street, Mount Maunganui
Independent Expert Report
on the proposed merger of
Property For Industry Limited and
Direct Property Fund Limited
8 May 2013
105
Contents
Abbreviations and Definitions 1
1. Executive Summary 3
2. Overview of the Property Fund Sector 8
3. Overview of Property For Industry 13
4. Overview of Direct Property Fund 20
5. Overview of the Merged Group 26
6. Merits of the Merger 32
7. Fairness of the Merger 47
8. Information, Disclaimer and Indemnity 49
9. Qualifications, Independence, and Consent 52
About Deloitte 53
106
Abbreviations and Definitions
$ New Zealand dollars
Court High Court of New Zealand
DPF Direct Property Fund Limited
DPFM DPF Management Limited, the manager of DPF
DPS distributable earnings per share
DRP dividend reinvestment plan
EBIT earnings before interest and tax
EBITDA earnings before interest, tax, depreciation, and amortisation
FNZC First NZ Capital
FY financial year ending 31 December for PFI, the Merged Group, and
DPF in relation to 2013, and financial year ending 31 March in
relation to DPFʼs historical financial results
Independent Expert Report this report into the merits and fairness of the Merger
Information Memorandum the information memorandum to shareholders of PFI and DPF

regarding the Merger
LPV listed property vehicle
Management Agreement PFI Management Agreement and the Deed of Variation of

Management Agreement dated 30 April 1999
Merged Group PFI and DPF and their respective subsidiaries, following completion
of the Merger
Merger the proposed merger of PFI and DPF, more fully described in the
Information Memorandum
Notices of Meeting the notices of meeting for PFI and DPF shareholders contained in
the Information Memorandum
NTA net tangible assets
NZSX the main board equity securities market operated by NZX
1
NZX NZX Limited
PIE portfolio investment entity
PFI Property for Industry Limited
PFIM PFIM Limited, the manager of PFI
Pro Forma forecast FY13 financial information for the Merged Group as if the
Merger had occurred on 31 December 2012
Scheme of Arrangement the scheme of arrangement and amalgamation to be undertaken

under Part 15 of the Companies Act, as set out in section 8 of the
WALT weighted average lease term
2
1. Executive Summary
1.1. Introduction
Property For Industry Limited (“PFI”), an NZSX-listed industrial property fund, and Direct Property
Fund Limited (“DPF”), an unlisted industrial and commercial property fund, are proposing to merge. It
is proposed that the merger will be effected via a scheme of arrangement under Part 15 of the
Companies Act 1993, and the resulting entity will be Property For Industry (the “Merger”).
Deloitte has been engaged to provide the shareholders of PFI and DPF with an independent expert
report on the merits and fairness of the Merger.
PFI had a market capitalisation of $288 million as at 31 March 2013. PFIʼs audited statement of
financial position as at 31 December 2012 recorded total investment and development properties of
$375 million and total equity of $250 million. DPFʼs audited statement of financial position as at 31
March 2012 recorded total investment and development properties of $403 million and total equity of
$217 million.
The Merger will amalgamate PFI, DPF and their respective subsidiaries (the “Merged Group”),
resulting in one of the largest listed industrial property companies in New Zealand with over $800
million of assets (at current valuations) and an expected market capitalisation of over $500 million.
PFI is managed by PFIM Limited (“PFIM”), a subsidiary of DPF Management Limited (“DPFM”), which
is the manager of DPF. DPFM is associated with McDougall Reidy & Co Limited through common
directors and shareholders.
1.2. Proposed Merger

PFI and DPF are proposing to merge by way of a Court-approved scheme of arrangement (the
“Scheme of Arrangement”), under which:
• PFI and DPF will amalgamate;
• DPF shareholders will receive 123.2180084 PFI shares for every DPF share they hold, with
their DPF shares being cancelled. (The manner in which entitlements will be rounded to
whole shares is described in section 3 of the Information Memorandum);
• PFI will take and assume all the property, rights, powers, privileges, liabilities and obligations
of DPF;
• PFI will continue as the merged company with the name “Property For Industry Limited”; and
• PFI shares will continue to be quoted on the NZSX under the ticker “PFI”.
3
Schemes of arrangement under Part 15 of the Companies Act 1993 (the “Act”) require that an
application is made to the High Court of New Zealand (the “Court”) to approve the scheme. As part of
that process, DPF and PFI are seeking approval for the Scheme of Arrangement by way of special
resolutions of PFIʼs and DPFʼs shareholders, prior to seeking the final Court order.
Resolution 1 for each of DPF and PFI are special resolutions seeking approval of the Scheme of
Arrangement. In order for the Merger to proceed, PFI and DPF must obtain the approval of 75% or
more of each group of shareholders entitled to vote and voting on the matter.
In addition to the special resolutions regarding the Scheme of Arrangement, PFI shareholders are
being asked to vote on ordinary resolutions to approve of the proposed changes to the PFI
Management Agreement and director remuneration (PFI resolutions 2 and 3). PwC has prepared a
separate Independent Appraisal Report in relation to the proposed changes to the PFI Management
Agreement.
The resolutions relating to the Scheme of Arrangement and the changes to the PFI Management
Agreement are interdependent and therefore for the Merger to proceed each of these resolutions
must be passed. If any one of these resolutions is not passed then the Merger will not proceed.
Under a scheme of arrangement, shareholders of the affected companies have the right to appear
and be heard at the hearing for the final Court order. The Court makes the final decision on whether
or not to implement a scheme of arrangement.
If shareholder approval is obtained and the final Court order granted, the Merger is intended to be
effected on 1 July 2013.
1.3. Purpose of the Report
Deloitte issues this report (the “Independent Expert Report”) for the benefit of the shareholders of both
PFI and DPF, to assist them in forming their own opinion on whether to vote in favour of or against the
resolutions relating to the Scheme of Arrangement.
We note that each shareholderʼs circumstances and objectives are unique. It is not possible to report
on the merits and fairness of the Merger in relation to each shareholder. This Independent Expert
Report is therefore necessarily general in nature.
This Independent Expert Report is not to be used for any other purpose without Deloitteʼs prior written
consent.
1.4. Basis of Evaluation
There is no regulatory prescription of how to assess a merger being undertaken via a scheme of
arrangement under the Act. Had the Merger been structured as a takeover of DPF by PFI then an
Independent Adviserʼs Report under the Takeovers Code would have been required for DPFʼs
shareholders, because DPF is a “code company” with more than 50 shareholders. We also note that
the Merger would be a major transaction under the NZSX Listing Rules. Under certain circumstances
(such as when related parties are involved) major transactions might require an Appraisal Report for
the listed companyʼs shareholders.
4
We have therefore decided to be guided by the standards used in both the Takeovers Code and
NZSX Listing Rules, and have applied these from the perspective of both sets of shareholders. The
Takeovers Code requires the Independent Adviserʼs Report to assess the “merits” of a takeover offer,
whereas the NZSX Listing Rules requires an Appraisal Report to consider the “fairness” of the
transaction or proposal in question.
Merits
There is no legal definition of the term “merits” in New Zealand in either the Takeovers Code or in any
statute dealing with securities or commercial law. The Takeovers Panel has specifically stated that it
does not wish to prescribe the meaning of “merits”. However guidance can be taken from:
• the Takeovers Panelʼs guidance note on the role of independent advisers, dated August
2007;
• the ordinary meaning of the term “merits”; and
• how that term has been interpreted in previous Independent Adviserʼs Reports.
The Takeovers Panel guidance suggests that a comparison of the offer price (whether it is a cash or
scrip offer) to the value of the target companyʼs shares is one aspect that should be considered, “but
this is only one of a number of issues that the adviser may usefully discuss in its report on the merits
of the offer.”
Other potential issues mentioned in the Takeovers Panelʼs guidance include:
• if the offer is a scrip offer, then consideration of the prospects of the company whose shares
are being offered, against the prospects of the target company;
• consideration of the position of the offerees if they opt not to accept the offer, including the
prospects of the consideration being increased; and
• the likelihood of a competing higher bid for the target company.
The New Collins Concise Dictionary of the English Language defines the term “merit” as “the actual
and intrinsic rights and wrongs of an issue, especially in a law case.” Blackʼs Law Dictionary defines
“merit” as “the substance, elements or grounds of a cause of action or defence.” These definitions
imply that the essential elements of an issue should be considered in forming a view on the issue
itself and an assessment is then made of the associated advantages and disadvantages of the issue
from the perspective of the relevant party.
For the purposes of this report, we consider that the Merger will have merit for the
shareholders of PFI and DPF if, after considering the advantages and disadvantages of the
proposed Merger, there are reasonable grounds to believe that each set of shareholders are
likely to be better off if the Merger proceeds, and there are not likely to be any superior
alternatives to the Merger.
5
Fairness
The NZSX Listing Rules require an Appraisal Report to consider the “fairness” of a material
transaction or proposal. The term “fair” has no legal definition in New Zealand either in the Listing
Rules or in any statute dealing with securities or commercial law.
Guidance Note Number 10 issued by the New Zealand Institute of Chartered Accountants (“Guideline
on Independent Chartered Accountants Reporting as Experts to Shareholders”) states “the
expression of an opinion as to fairness will generally involve an assessment as to whether a
transaction or proposal is just, impartial and equitable”.
There is considerable overlap in the definitions of merits and fairness. For the purposes of this report,
if we conclude that the Merger has merit for both groups of shareholders, we will then consider if the
terms of the proposed Merger are fair.
In this context, we consider that the Merger will be fair if the benefits of the Merger are shared
in a broadly equal manner between the two groups of shareholders.
We also consider whether the change in management fees experienced by DPF shareholders if the
Merger proceeds is fair. PwC has separately opined on the proposed changes in the PFI
Management Agreement from the perspective of the existing PFI shareholders.
Our opinion should be considered as a whole. Selecting portions of the evaluation without
considering all the factors and analysis together could create a misleading view of the process
underlying our opinion.
1.5. Deloitteʼs Opinion of the Merger
In our opinion, after having regard to all relevant factors, the Merger has merit for the
shareholders of both PFI and DPF, and the benefits of the Merger are shared fairly between the
shareholders of PFI and DPF.
The basis for our opinion is set out in more detail in sections 6 and 7. In summary, the key factors we
have taken into account in forming our opinion are as follows:
• the Merger provides a number of portfolio or operational benefits to both sets of shareholders,
such as smoothing out the lease expiry profile, and reducing the percentage exposure to
individual tenants and properties;
• the Merger is expected to improve the liquidity of PFI shares, greatly improve liquidity for DPF
shareholders, and potentially improve PFIʼs access to, and reduce the cost of, capital;
• there are no material negative financial impacts for either shareholder group:
− while the Merger dilutes DPF shareholdersʼ net tangible assets (“NTA”), it is expected
to preserve the market value of DPF shareholdersʼ investment;
− the combination of the Merger and the buy-out of DPFʼs swaps is earnings accretive
for both shareholder groups (although most of the accretion is due to the swaps buy-
out, which has an associated cost reflected in higher debt levels);
6
− after removing the impact of the DPF swaps buy-out, and other normalisation
adjustments, the Merger is expected to be broadly earnings neutral for both
shareholder groups (on average over time); and
− while the NTA and earnings outcomes for DPF shareholders would have been
approximately 2.5% better but for the 5% tilt in the Merger ratio in favour of PFI, we
believe this is a reasonable trade-off for the materially greater liquidity they will likely
achieve in the Merger (and a share of the other Merger benefits).
• the recent increase in PFIʼs share price does not, in our view, invalidate the Merger ratio or
our analysis of the financial impacts of the Merger, because the underlying value of DPFʼs
shares is likely to have increased in a similar manner;
• there do not appear to be any viable alternatives for either shareholder group that are likely to
be superior to the Merger; and
• there is a reasonable basis for the Merger ratio, and the benefits of the Merger are shared
fairly between the shareholder groups.
We also believe the management fee changes that DPF shareholders will experience if the Merger
proceeds are fair.
1.6. Acceptance or Rejection of Resolutions
Voting for or against the resolutions in respect of the Scheme of Arrangement is a matter for individual
shareholders based on their own views of the Merger. Shareholders should consult their own
professional advisers if appropriate.
In the event that any of the resolutions in respect of the Scheme of Arrangement and changes to the
PFI Management Agreement are not approved by the PFI or DPF shareholders, then PFI and DPF
will remain stand-alone entities. The implication of this situation is that the benefits of the Merger will
not be available to either DPF or PFI shareholders.
The potential exists for alternative or competing offers for the assets or the shares of DPF or PFI.
However as at the date of this report, no approaches have been made to the directors or
shareholders of either company.
1.7. Adequacy of Information
We have obtained all the information that we believe is necessary for the purpose of preparing this
Independent Expert Report.
In our opinion, the information set out in the Information Memorandum and this Independent Expert
Report is sufficient to enable DPFʼs and PFIʼs shareholders to understand all the relevant factors and
to make an informed decision in respect of the Scheme of Arrangement.
7
2. Overview of the Property Fund
Sector
2.1. Listed Property Vehicles
Listed property vehicles (“LPVs”) are professionally managed real estate investment vehicles that
allow investors to purchase an equity interest in a portfolio of properties. Currently there are nine
NZSX LPVs, including PFI, with a range of different property category focuses, corporate structures
and management arrangements (i.e. internally or external managed).
While DPF is unlisted, it shares many of the other characteristics of an LPV (large property portfolio;
professionally managed; broad spread of shareholders; no controlling shareholding block; focus on
dividend yield and NTA growth).
LPVs provide an opportunity for investors to hold stakes in investment-grade property portfolios, with
professionals maintaining and improving the buildings, retaining tenants and actively managing the
property portfolio and capital structure so as to maximise risk-adjusted returns.
An investment in a LPV is different to a direct investment in property. The investor is exposed to a

diverse portfolio of properties, as opposed to a single property, and the units or shares can be traded
on the NZSX and therefore have greater liquidity.
Investors evaluate LPVs by reference to the level of cash distributions and movements in share
prices, and by assessing the security of the LPVʼs income stream, the quality of the fundʼs properties
and tenants, the length of tenant leases, rental yields, appropriateness of the capital structure and the
quality of the management.
2.2. Property Portfolio Metrics
We discuss below some of the key metrics commonly used to describe and compare LPVs. We focus
on the largest eight LPVs (i.e. excluding Augusta Capital Limited), and we include the metrics for DPF
and the Merged Group for comparison.
8
Scale
The following table provides information on the size of New Zealand LPVʼs property portfolios (and
DPF for comparison). Greater scale typically provides an entity with advantages such as greater
diversity of earnings, a stronger capital base to fund developments, and better share liquidity and
access to capital. Presently, PFI and DPF are the 7th and 8th largest property entities, respectively.
The Merged Group would be the 5th largest listed property entity on the NZSX by total asset size.
NZ Property Entities - Asset Base

Total No. of Average
$ millions Assets NTA properties property value
Kiw i Income Property Trust 2,066.1 1,068.8 11.0 182.4
Goodman Property Trust 1,679.8 852.9 23.0 71.4
Precinct Properties New Zealand Limited 1,483.5 875.4 16.0 91.3
Argosy Property Limited 921.2 478.9 65.0 13.9
Merged Group1 821.6 479.8 83.0 9.8
DNZ Property Fund Limited 679.7 377.2 51.0 13.1
Vital Healthcare Property Trust 627.5 300.5 24.0 26.0
Direct Property Fund Limited1 411.4 230.3 33.0 12.6
Property For Industry Limited 1
400.9 254.4 50.0 8.0
NPT Limited 129.2 92.2 5.0 25.3
1. P FI, DP F and M erged Gro up figures as at 31M arch 2013. Other entities presented
at their mo st recent available balance date.
So urce: A nnual repo rts, Delo itte analysis
Property Mix
The properties owned by LPVs are often classified into four categories: office, industrial, retail, and
other (such as specialist healthcare properties).
There are three LPVs with a focus on one property category: Vital Healthcare (medical properties);
Precinct Properties (office) and PFI (industrial). The remainder are diversified across a combination
of categories, albeit different combinations and relative focuses. DPFʼs portfolio, like PFIʼs, is also
primarily focused on the industrial sector. As a result, the Merged Group will have one of the largest
industrial property portfolios among the NZSX-listed LPVs.
9
Geographic Mix
The chart below shows the geographic diversification of the property entitiesʼ portfolios.
All the property entities with the exception of Vital Heathcare hold property investments only within
New Zealand. The majority of Vital Healthcareʼs properties (75%) are located in Australia. PFI and
DPF (and therefore the resulting Merged Group) have property portfolios concentrated within
Auckland.
WALT and Lease Expiry
One of the key factors that managers of property entities focus on is their portfolioʼs lease profile.
Specifically, they seek to extend the weighted average lease term (“WALT”) of the portfolio and
smooth the lease expiry profile.
The chart below shows the WALT for selected New Zealand property entities. DPF has one of the
highest WALTs, while PFI is below the median industry WALT of 5.6 years.
10
2.3. Capital Structure and Liquidity
Gearing
Maintenance of appropriate debt levels and financial risk management policies are key areas of focus
for property entities. Gearing (debt to total property assets) of 30% to 40% has become common in
the LPV sector. DPF has one of the highest gearing ratios in the industry at 40%, versus an industry
average of 36%. PFI has the second lowest gearing ratio at 33%.
Institutional Ownership
LPVs have varying levels of institutional ownership. PFI has relatively low institutional ownership at
21.1%.
11
Liquidity
One of the benefits of investing in an LPV as opposed to investing directly into a specific property, is
the greater liquidity available. That is, it is easier and less costly to sell some or all of an investment
in shares than it is to sell a property.
However, there are varying levels of liquidity amongst the LPVs. One measure of liquidity is the
median daily value of share trading. The following table summarises the median daily value of trading
over the past two years for the LPVs and DPF.
12
3. Overview of Property For Industry
3.1. Background
PFI is a listed property company and is New Zealandʼs only LPV specialising in industrial property.
PFI was formed by interests associated with Willis Bond & Co in 1993 and was listed on the stock
exchange in December 1994. From 1999 to 2011 PFI was managed by AMP Capital Investors. In
January 2012 PFIM Limited (a subsidiary of DPF Management Limited, a company associated with
McDougall Reidy & Co) purchased the rights to manage PFI.
3.2. Property Portfolio
PFIʼs nationwide portfolio of 50 properties had a total value of $400 million as at 31 March 2013.
PFIʼs portfolio is focused on properties in the Auckland industrial sector. The charts below show PFIʼs
asset allocation by category and geographic location.
PFIʼs major property locations include Rosebank Road (Avondale; Auckland) and Mt Wellington
Highway (Auckland). A full list of PFIʼs current property portfolio is shown in the Information
Memorandum.
13
PFI has a total of 84 separate tenants for its 50 properties. The chart below shows PFIʼs lease expiry
profile as at 31 March 2013. As at 31 March 2013, PFI had an occupancy rate of 98%.
3.3. Management of PFI
PFI is managed by PFIM Limited (“PFIM”), a wholly-owned subsidiary of DPFM (a company

associated with McDougall Reidy). DPFM is also the manager DPF.
PFIM Limited receives management fees in accordance with the Deed of Variation of Management
Agreement dated 30 April 1999 (the “Management Agreement”). The management fee comprises a
base fee calculated as a percentage of the total assets under management, and a performance fee
based on shareholder return.
The base fee is calculated as 0.70% per annum of total assets up to $175 million plus 0.35% per
annum of total assets held above $175 million.
The performance fee is payable when the total shareholder return for the quarter is greater than 10%
per annum (2.5% per quarter). The amount payable is 10% of the shareholder return above 10% per
annum, but subject to a cap equal to total shareholder return of 15% per annum. If the total
shareholder return is greater than the 15% per annum cap or less than the 10% per annum threshold,
then the amount of under or over performance is carried forward to the next quarter. Deficits and
excesses are carried forward for up to seven quarters after which, if not applied to a fee, the carried
forward balance expires.
14
3.4. Financial Position
The table below summarises PFIʼs financial position at the two most recent year ends, and a forecast
of the financial position as at 31 December 2013.
PFI's Financial Position

As at As at As at
31-Dec-11 31-Dec-12 31-Dec-13
$ 000s (audited) (audited) (forecast)
Current assets 915 1,497 794
Prepayments and other assets 6,821 7,621 7,860
Trade and other payables (2,167) (3,259) (1,813)
Current tax payable (509) (1,091) (1,415)
Working capital 5,060 4,768 5,425
Non-current assets
Investment and development property 350,777 375,494 396,427
Non-current liabilities
Interest bearing liabilities (102,500) (114,200) (133,100)
Derivative financial instruments (9,454) (8,097) (5,107)
Bank overdraft (116) - -
Deferred tax liabilities (6,426) (7,881) (6,083)
Total liabilities (118,496) (130,178) (144,290)
Net Assets 237,341 250,084 257,563
NTA($000's) 237,341 250,084 257,563
Total Assets ($000's) 358,513 384,612 405,080
NTA per share ($) 1.08 1.13 1.17
Gearing 28.6% 29.7% 33.0%
Shares on issue (000s) 219,011 220,411 220,411
So urce:P ro perty fo r Industry 2011and 2012 annual repo rts and P FI Fo recast M o del
In addition to gains on revaluations, movements in property values were also driven by acquisitions
and disposals. Acquisitions and disposals were nil and $10.4 million for FY11, respectively, and
$23.2 million and $15.6 million for FY12. Property values also include prepaid leasing costs and
capitalised lease incentives totalling $5.1 million and $6.6 million for FY11 and FY12 respectively.
PFI currently has a $150 million bank debt facility, of which $114.2 million was drawn as at 31
December 2012 ($102.5 million as at 31 December 2011). In accordance with its hedging policy, PFI
has used interest rate swaps to fix a portion of its interest rate exposure. For the balance dates
shown above, the interest rate swaps had a negative fair value (as the expected future interest rates
are lower than the fixed rates of the swap contracts).
15
3.5. Financial Performance
The table below summarises PFIʼs recent and forecast FY13 financial performance.
PFI's Financial Performance

Year ending Year ending Year ending
$ 000s 31-Dec-11 31-Dec-12 31-Dec-13
(audited) (audited) (forecast)
Incom e
Rental income 30,589 29,214 31,458
Management fee income 219 192 175
Total incom e 30,808 29,406 31,633
Property operating expenses (580) (1,329) (917)
Management fees - base fee (1,865) (1,882) (2,009)
Other administrative expenses (820) (862) (870)
Net operating profit before financing 27,543 25,333 27,837
Net finance costs (8,277) (8,085) (8,643)
Net operating profit after financing 19,266 17,248 19,194
Unrealised net change in fair value of derivative instruments (4,219) 1,357 2,990
Net change in value of property investments 3,653 12,302 2,768
Gain/ loss on disposal of investment property 261 1,059 -
Net profit before tax attributable to shareholders 18,961 31,966 24,952
Current tax (3,490) (3,579) (4,271)
Deferred tax 877 (1,455) 1,798
Net profit after tax attributable to shareholders 16,348 26,932 22,479
Rental yield 8.5% 8.2% 8.2%
Weighted average number of shares (000s) 218,721 220,018 220,411
Distributable earnings before tax per share (cents per share) 8.81 8.26 8.54
Effective tax rate on distributable income 18.1% 20.8% 22.3%
Distributable earnings after tax per share (cents per share) 7.21 6.64 6.60
Percentage of after tax income distributed 100% 99%
Cash distributions per share for the period (cents per share) 7.18 6.60
So urce:P ro perty fo r Industry 2011and 2012 annual repo rts and P FI Fo recast M o del
The financial performance for FY11 and FY12 is based on PFIʼs audited annual accounts. The FY13
forecast has been reviewed by KPMG (refer to section 6 of the Information Memorandum).
The operating performance of PFI (as represented by the net operating profit before financing)
reduced between FY11 and FY12, however it is forecast to improve in FY13. The reduction in FY12
was due to:
• a combination of property sales ($0.8 million rent reduction in FY12) and vacancies
($0.6 million rent reduction in FY12); and
• property expenses increased from $0.6 million to $1.3 million due to the profit impact of the
adjustment of various prepayments and other assets, and increased costs associated with
vacancy during the year.
Distributable earnings per share (“DPS”) decreased between FY11 and FY12 as a result of the
reduction in operating profit.
16
3.6. Shareholders
As at 31 March 2013 PFI had 220.4 million shares on issue. The name of, number of shares held by,
and percentage holding of, the ten largest shareholders as at 31 March 2013 are set out below:
Top 10 Shareholders as at 31 March 2013

% of total
Shareholder No. of shares shares
FNZ Custodians Limited 16,884,086 7.7%
National Nominees New Zealand Limited 13,822,048 6.3%
Custodial Services Limited 10,278,496 4.7%
Investment Custodial Services Limited 9,598,788 4.4%
BNP Paribas Nominees (NZ) Limited 8,259,715 3.7%
Custodial Services Limited 4,414,275 2.0%
Private Nominees Limited 4,130,363 1.9%
Accident Compensation Corporation 4,086,005 1.9%
Masfen Securities Limited 4,000,905 1.8%
Superlife Trustee Nominees Limited 2,804,154 1.3%
Total top 10 shareholders 78,278,835 35.5%
Other shareholders 142,131,893 64.5%
Total shares on issue 220,410,728 100.0%
So urce: M anagement info rmatio n
Most of the large shareholders listed above are custodians holding shares on behalf of investors.
There were no substantial security holders (holding a beneficial interest in 5% or more of PFIʼs
shares) as at 31 March 2013.
3.7. Share Trading
Historic Trading
The chart above shows the share price history and the trading volume for PFI since March 2007. We
note the following:
• PFIʼs shares have traded between $0.98 and $1.55 since March 2007. The downward trend
over the period from late 2007 to early 2009 reflects the effect of the global financial crisis.
• PFIʼs share price started recovering from early 2009 (increasing from its lowest share price of
$0.98 in December 2008).
17
As can be seen in the following chart, PFI has outperformed the NZX Gross Property Index since
August 2007.
The following chart shows that PFIʼs shares traded at a premium to NTA per share from December
2002 until 2008. PFIʼs share price then declined to levels below NTA per share during 2008 and
2009, as the market reacted more strongly than property valuers to the impacts of the global financial
crisis on property values. Share prices have generally been on an upward trend since 2009. Over
2011 and 2012 PFIʼs shares traded at a premium to NTA that averaged approximately 9%.
18
Recent Share Trading
Since February 2013 PFIʼs share price, and the share price of LPVs generally, have risen strongly, as
shown in the chart below.
As at 24 April 2013, PFIʼs share price was $1.34, an 18% premium to NTA.
Trading Volume and Value
The volume and value of trading in PFIʼs shares is relatively low compared to other LPVs. Over the
last two years, PFIʼs median and average daily trading values were approximately $112,000 and
$151,000 respectively. This compares to median and average daily trading values for all LPVs of
$370,000 and $572,000 respectively.
19
4. Overview of Direct Property Fund
4.1. Background
Direct Property Fund is an unlisted property investment company focused on industrial and, to a
lesser extent, commercial property. It was formed in November 2003 by executives associated with
Willis Bond & Co Auckland, which is now called McDougall Reidy & Co, a private investment firm
specialising in the property sector.
DPF has raised money from investors seeking a diversified exposure to industrial and commercial
property, with a medium to long term investment horizon. In general, these investors have viewed
their investment in DPF as an alternative to direct property ownership. The price at which shares
have been traded has been based on the value of the underlying property portfolio, and the cash
distributions have been equal to the fundʼs cash earnings.
As at 31 March 2013, DPFʼs property portfolio had a value of $414 million. DPFʼs portfolio is focused
on properties in the Auckland industrial sector. The charts below show DPFʼs asset allocation by
category and geographic location.
20
As at 31 March 2013, DPF had 55 separate tenants on its 33 properties. The chart below shows
DPFʼs lease expiry profile as at 31 March 2013.
DPFʼs occupancy rate declined from 98.6% in March 2011 to 94.6% at March 2012 primarily due to
the failure of two tenancies in East Tamaki and Wiri. As at 31 March 2013 the occupancy rate was
96.3%.
4.3. Management of DPF
Direct Property Fund is managed by DPF Management Limited. DPFM wholly owns PFIM, the
manager of PFI. DPFM has a number of shareholders in common with McDougall Reidy & Co
Limited.
DPF pays DPFM a single management fee based on the value of assets under management (i.e.
there is no separate performance fee). The fee is calculated as the sum of: 0.75% per annum of
DPFʼs portfolio value up to $250 million; 0.55% per annum of the value from $250 million to $500
million; and 0.45% per annum of the value above $500 million.
21
4.4. Financial Position
The table below summarises DPFʼs financial position at the two most recent year ends, and a forecast
of the financial position as at 31 December 2013. The latter has been prepared as if DPF had been
listed for all of 2013, so that its tax status would change to that of a listed Portfolio Investment Entity
(“PIE”) and therefore be consistent with tax status of PFI and the Merged Group.
DPF's Financial Position

As at As at As at
31-Mar-11 31-Mar-12 31-Dec-13
$ 000s (audited) (audited) (forecast)1
Current assets 1,303 350 312
Prepayments and other assets 11,361 1,730 4,738
Trade and other payables (3,092) (3,017) (1,981)
Current tax payable - - (956)
Working capital 9,572 (937) 2,112
Non-current assets
Investment and development property 383,495 402,536 415,695
Interest bearing liabilities (179,330) (173,600) (173,300)
Derivative financial instruments (9,558) (11,264) (7,695)
Deferred tax liabilities - - (1,063)
Total liabilities (188,888) (184,864) (182,058)
Net Assets 204,179 216,735 235,750
NTA($000's) 204,179 216,735 235,750
Total Assets ($000's) 396,159 404,616 420,745
NTA per share ($) 141.9 140.7 152.0
Adjusted NTA per share ($) 2 146 145
Gearing 45.5% 43.0% 41.2%
Shares on issue (000s) 1,439 1,540 1,551
1. A udited M arch 2013 figures were no t avaliable at the date o f this repo rt.
2. A djusted NTA is net o f any dividends payable and liability o r asset relating to interest rate swaps.
So urce: DP F 2012 annual repo rt and M anagement DP F mo del
Key matters to consider when reviewing DPFʼs financial position are:

• Movements in property values were driven by property devaluations of $1.7 million in FY12
and net acquisitions and capital expenditure of approximately $22 million. FY12 property
values also include prepaid leasing costs and capitalised lease incentives of $1.2 million.
• During FY12 DPF raised $6.4 million of new capital through a renounceable rights issue.
Private placements raised $2.2 million, and $4.2 million of shares were issued for the
purchase of a Hamilton property. The dividend reinvestment plan (“DRP”) raised $1.5 million
in FY11 and $2.0 million in FY12.
22
4.5. Financial Performance
The table below summarises DPFʼs historical financial performance for FY11 and FY12, and forecast
performance for 2013. The FY13 forecast has been reviewed by KPMG (refer to section 6 of the
Information Memorandum).
DPF's Financial Performance

Year ending Year ending Year ending
$ 000s 31-Mar-11 31-Mar-12 31-Dec-13
(audited) (audited) (forecast)1
Incom e
Rental income 30,475 31,819 32,053
Total incom e 30,475 31,819 32,053
Management fees - base fee (2,572) (2,637) (2,751)
Other administrative expenses (507) (484) (875)
Property operating expenses (795) (963) (614)
Net operating profit before financing 26,601 27,735 27,812
Net finance costs (11,694) (11,449) (11,498)
Net operating profit after financing 14,907 16,286 16,315
Unrealised net change in fair value of derivative instruments (2,867) (1,706) 4,408
Net change in value of property investments 1,761 (1,711) 3,368
Gain/ loss on disposal of investment property (450) 706 (757)
Net profit before tax attributable to shareholders 13,351 13,575 23,335
Rental yield 8.3% 8.2% 7.6%

Weighted average number of shares (000s) 1,417 1,478 1,551
Distributable earnings before tax per share ($ per share) 10.52 11.02 10.51
Percentage of after tax income distributed 100% 97%
Cash distributions per share for the period ($ per share) 10.52 10.70
1. A udited M arch 2013 figures were no t avaliable at the date o f this repo rt.
So urce: Direct P ro perty Limited 2012 annual repo rt and management DP F mo del
In FY11 and FY12, operating profit was adversely impacted by the failure of two tenants. This
resulted in reduced rental income and increased operating expenses (rates, insurance, etc.) on
vacant properties.
Other administrative expenses are abnormally high in the FY13 forecast due to the establishment of a
one-off provision of $435,000 in respect of the non-cash components of certain fixed rental
arrangements.
23
4.6. Shareholders
The table below shows the composition of DPFʼs shareholders as at 31 March 2013.
DPF Shareholder Spread

Shareholding No. of No. of % of total % of
Size shareholders shares shares shareholders
1-99 11 568 0.0% 2.2%
100-199 29 3,625 0.2% 5.8%
200-499 79 22,728 1.5% 15.7%
500-999 111 74,873 4.8% 22.1%
1,000-1,999 93 125,145 8.1% 18.5%
2,000-4,999 100 302,190 19.5% 19.9%
5,000-9,999 51 345,689 22.3% 10.1%
10,000-49,999 28 606,588 39.1% 5.6%
50,000-99,999 1 69,436 4.5% 0.2%
503 1,550,842 100.0% 100.0%
Independent directors shareholdings 17,636 1.1%

Manager's shareholding 27,397 1.8%
Shareholders of the Manager shareholdings 76,257 4.9%
121,290 7.8%
DPFʼs shareholder base is relatively concentrated. At 31 March 2013 DPF had a total of 503 investors
with an average investment of over $450,000. Of these, 85 shareholders have over $700,000
invested.
4.7. Share Trading
Historic Trading
The manager of DPF (DPFM) and ShareMart (an electronic trade-matching service) each facilitate
trading of DPF shares. Most of the volume has been transacted via the manager - the majority by
matching buyers and sellers, and a relatively small proportion by DPF repurchasing sellersʼ shares for
subsequent issue to buyers. Historically, the shares have traded at a value around DPFʼs definition of
“adjusted NTA value per share”. The adjusted NTA has typically been calculated by deducting any
dividends to be declared in relation to the period and after adding back the value of DPFʼs fixed
interest rate swaps.
DPF has undertaken a number of renounceable rights issues and also operated a dividend
reinvestment plan to raise capital. The renounceable rights issues have all been priced at adjusted
NTA, while the DRP has been at a 2.5% discount to adjusted NTA.
24
The following chart shows the trading price over the past two years. For this period the “adjusted
NTA”, and therefore the share price, has been at a premium of approximately 4% to unadjusted IFRS
NTA.
Trading Volume and Value
The trading in DPF shares has been limited in volume. The average daily trading value of DPF
shares over the last two years has been approximately $38,000 per day, compared to an average
daily trading volume for PFI of approximately $151,000 and the average for all LPVs of $572,000.
Recent Trading
As discussed in section 3.7, the share prices of LPVs have risen strongly over the last couple of
months. For example, as at 24 April 2013 PFI traded at $1.34, an 18% premium to NTA. Over the
same period, there has been no trading in DPF shares. DPFM has over $3 million of requests to
acquire shares, and no shareholders willing to sell at the current “adjusted NTA”. This indicates that,
as with the LPVs, investors perceive the current value of DPFʼs shares to be materially above NTA.
25
5. Overview of the Merged Group
5.1. Introduction
The Merger will result in a listed property company with $814 million of property assets as at 30 June
2013 (of which $664 million will be industrial property), making it one of the largest industrial property
LPVs. The Merged Group is forecast to have net tangible assets of $481 million as at 30 June 2013
and an expected market capitalisation of over $500 million. This is a significant increase in scale to
either stand-alone entity.
This section outlines the expected property and financial metrics for the Merged Group.
The Merged Group will consist of mainly industrial property, with most located in Auckland market.
26
The WALT of the Merged Group, at 5.6 years, is a blend of the WALTs for the DPF and PFI portfolios.
The lease expiry profiles are somewhat complementary and therefore smooth the percentage of
leases that expire in a particular year. The resulting lease expiry profile is shown below.
5.3. Management of Merged Group
The Merged Group will be managed by PFIM Limited, under an amended and restated version of the
PFI Management Agreement.
Under the Merger, PFIʼs management contract with PFIM will continue, with PFIM managing the
Merged Groupʼs entire property portfolio. The key terms of the (amended) Management Agreement
will be:
• the base fee will be calculated as the sum of: 0.725% per annum of the Merged Groupʼs total
assets excluding goodwill up to $425 million; 0.45% per annum of the total assets from $425
million to $775 million; and 0.35% per annum of the value above $775 million; and
• a performance fee that is payable when the total shareholder return for a quarter is greater
than 10% per annum (2.5% per quarter). There is no change to the calculation of this
performance fee from the current PFI performance fee as described in section 3.3.
The amended thresholds for the base fee calculation are designed to provide PFIM with a base fee
for managing the Merged Group that is similar to the total base fees currently being paid to PFIM and
DPFM for managing PFI and DPF respectively.
The fairness of the proposed changes to PFIʼs Management Agreement for PFIʼs shareholders is the
subject of an Independent Appraisal Report by PwC. In section 7.2, we consider the fairness of the
changes in the management fees that the Merger would entail for DPF shareholders.
27
5.4. Pro Forma Financial Position
The table below summarises the pro forma financial position of the Merged Group as at 28 February
2013 and 31 December 2013, as if the Merger had occurred on 31 December 2012 (“Pro Forma”).
The Pro Forma forecast has been reviewed by KPMG (refer to section 6 of the Information
Memorandum).
Merged Group Financial Position

As at As at
28-Feb-13 31-Dec-13
$ 000s (pro forma) (pro forma)
Current assets 778 841
Prepayments and other assets 11,499 12,597
Trade and other payables (3,982) (3,541)
Current tax payable (1,199) (2,638)
Working capital 7,096 7,259
Non-current assets
Investment and development property 781,919 812,122
Goodw ill 9,761 9,761
Interest bearing liabilities (291,698) (318,198)
Derivative financial instruments (6,710) (5,107)
Deferred tax liabilities (9,849) (9,300)
Total liabilities (308,255) (332,605)
Net Assets 490,520 496,537
The Pro Forma forecasts assume:
• that the Merger had occurred on 31 December 2012, and therefore incorporate periods of
operating as the Merged Group;
• property revaluations in December 2013 totalling $4.5 million (see section 6 of the Information
Memorandum);
• the DPF swap portfolio is closed out at fair value prior to the Merger and new swaps are
entered into by the Merged Group at prevailing swap rates; and
• that future interest rates are consistent with market forecasts.
The Merger will result in goodwill on the balance sheet of the Merged Group. The goodwill arises
because the fair value of the PFI shares being issued (191 million at PFIʼs share price on the Merger
date) is likely to be greater than DPFʼs NTA. The actual amount of goodwill on the Merged Groupʼs
balance sheet will depend on the relationship between PFIʼs share price and DPFʼs NTA at the time of
the Merger.
As part of the Merger, DPF intends to realise its interest rate swap portfolio and the Merged Group will
enter into new swaps to maintain compliance with PFIʼs hedging policy. This will result in a reduction
in the derivative financial instruments liability and an increase in debt. This is reflected in the financial
position table above.
28
5.5. Pro Forma Financial Performance
The following table summarises the Pro Forma forecast financial performance of the Merged Group
for the 12 months ending 31 December 2013, assuming a full year of operations as the Merged
Group.
Merged Group Financial Performance

Year ending
$ 000s 31-Dec-13
(pro forma)
Incom e
Rental income 63,687
Total incom e 63,687
Management fees - base fee (4,788)
Other administrative expenses (1,604)
Property operating expenses (1,532)
Net operating profit before financing 55,763
Net finance costs (17,356)
Net operating profit after financing 38,407
Unrealised net change in fair value of derivative instruments 2,990
Net change in value of property investments 6,136
Gain/ loss on disposal of investment property (757)
Net profit before tax attributable to shareholders 46,776
Taxation (6,209)
Net profit after tax attributable to shareholders 40,567
The Pro Forma forecast assumes a performance fee is not payable, as any outperformance of the
threshold would not exhaust the accumulated underperformance of the fund over the past seven
quarters.
The increase in property values over the period is a result of a $1.7 million revaluation of PFI
properties in February 2013 and forecast revaluations on the total portfolio of $4.5 million in
December 2013.
Other administrative expenses are abnormally high in the Pro Forma forecast due to the
establishment of a provision of $435,000 in respect of the non-cash components of certain fixed rental
arrangements.
The Pro Forma forecast includes $145,390 of administrative cost savings as a result of the Merger,
consisting of:
• a 50% cost saving ($87,277) on DPFʼs professional services (legal, accounting, and other
professional fees);
• cost savings of $54,512 in relation to share registry, annual general meetings, and interim and
annual reports, as a result of being one entity as opposed to two; and
• a small saving of $3,600 on board costs, albeit with the same number of directors as the two
stand-alone entities.
The Merger will also result in an interest cost saving of $2.8 million due to the close-out of the DPF
swaps and a slightly lower overall margin and better utilisation of the combined banking facilities.
29
5.6. Capital Structure and Shareholders
The Merger will result in an increase in PFI shares outstanding from 220.4 million to 411.5 million.
The existing PFI shareholders will own 53.6% of the Merged Group and DPF shareholders will hold
the remaining 46.4%.
Merged Group Shareholding
DPF shares Merger ratio PFI shares %

PFI shares 220,410,728 53.6%
DPF shares 1,550,842 123.2180084 191,091,663 46.4%
Merged Group shares 411,502,391 100.0%
DPF has 503 shareholders, who will become shareholders in the Merged Group. There are no
substantial shareholders (holding 5% or more) in either DPF or PFI, and therefore there will be no
substantial shareholders in the Merged Group. This also means that there are no shareholders who
have any significant influence over the company and there are no shareholders who are able to
single-handedly pass or block ordinary or special resolutions.
The manager of DPF holds 1.8% of the shares in DPF, and upon the Merger it will hold 0.8% of the
Merged Group. Certain shareholders of DPFM also individually own a total of 4.9% of DPF and will
therefore own approximately 2.3% of the Merged Group.
5.7. Summary of Merged Group
The table below provides a summary of some of the key portfolio and financial metrics for PFI, DPF
and the Merged Group.
Portfolio and Financial Statistics
As at 31 March 2013 PFI DPF Merged Group

Portfolio value $400m $414m $814m
No. of properties 50 33 83
1
No. of tenants 84 55 137
WALT 4.8 years 6.4 years 5.6 years
Contract yield 8.2% 7.6% 7.9%
Occupancy rate (2013) 98.2% 96.3% 97.2%
Contract rental (2013) $32.8m $31.7m $64.5m
Asset mix 97% Industrial, 67% Industrial, 82% Industrial,
3% Other 33% Other 18% Other
Geographic mix 89% Auckland, 85% Auckland, 87% Auckland,
11% Other 15% Other 13% Other
Distributable earnings (FY13) $14.5m $13.4m $30.1m
Gearing (loan to value) 32.6% 40.3% 38.0%
Net tangible assets $254m $230m $480m
Shares in Merged Group 53.6%, 46.4%, 100%,
220.4m 191.1m 411.5m
1 P FI and DP F have two tenants in co mmo n.
30
5.8. Merger Exchange Ratio
The Boards of DPF and PFI reached agreement on the terms of the Merger after extensive due
diligence and negotiations. These negotiations recognised a number of factors including historical
trading premiums to NTA for each entity, the historic earnings and distribution yields of each entity,
the portfolio characteristics of each entity, the costs associated with PFI raising capital to buy DPF's
assets, the costs of DPF listing independently, and indexation and liquidity benefits for both PFI and
DPF.
These negotiations resulted in a Merger exchange ratio of 123.2180084 PFI shares for each DPF
share. This ratio was calculated as shown in the following table.
Merged Group Shareholding
PFI DPF
Net Assets at 28 Feb 2013 256,629,376 229,976,181
Adjustm ents
Declared but unpaid dividends (4,077,598)
Undistributed earnings (2,537,678) (2,189,741)
DPF deferred tax (244,767)
Bow den road acquisition revaluation 400,000
Net assets for merger ratio calculation 250,414,100 227,541,673
Number of shares 220,410,728 1,550,842
NTA per share 1.14 146.72
Premium 9.0% 4.0%
1.24 152.59
Merger Ratio 123.2180084
The Merger ratio was calculated using the 28 February 2013 NTA values for PFI and DPF, adjusted
for the following factors:
• DPF paid a dividend relating to earnings over the period 1 October 2012 to 31 December
2012 during February, whereas PFI will pay a dividend relating to the period in March.
Therefore an adjustment is required for PFI;
• undistributed earnings of DPF and PFI over the period 1 January 2013 to 28 February 2013
are removed;
• as DPF is an unlisted PIE, it does not account for deferred tax and therefore an adjustment is
required to bring the deferred tax liability “on balance sheet” and consistent with the intended
future tax treatment;
• as at 28 February 2013, PFI had entered an unconditional contract to acquire a property on
Bowden Road, Mt Wellington. The acquisition of this property completed on 15 March 2013
and its valuation has been assessed at $400,000 greater than its purchase price. As there
was an unconditional commitment to acquire the property at 28 February 2013, this gain is
brought into PFI's NTA position; and
• a 9% premium was applied to the PFI adjusted NTA and a 4% premium was applied to the
DPF adjusted NTA, to recognise the fundsʼ relative trading price premiums over IFRS NTA
over the last two years and the other factors noted above such as the differences in liquidity
and the costs of raising capital or listing.
31
6. Merits of the Merger
6.1. Introduction
As explained in section 1.4, our approach to evaluating the Merger is to consider the merits of the
Merger from the perspective of both sets of shareholders. If the transaction is considered to have
merit for both PFIʼs and DPFʼs shareholders, we then consider (in section 7) whether the terms of the
Merger and the split of the benefits are fair for each shareholder group.
In assessing the merits of the Merger, we have considered three broad categories of impacts:
• portfolio or operational impacts;
• liquidity and other capital markets impacts; and
• financial impacts.
We have also considered:
• whether our assessment of the Merger is affected by the recent increases in PFIʼs share price;
and
• whether there are likely to be better alternatives to the Merger available to either shareholder
group.
6.2. Portfolio or Operational Impacts
The Merger would result in a number of portfolio or operational benefits that are shared between PFIʼs
and DPFʼs shareholders, including:
• smoother lease expiry profile;
• complementary tenant profiles;
• operational benefits of scale:
− reduced exposure to individual tenants or properties;
− enhanced ability to attract or retain tenants;
− enhanced ability to undertake developments; and
• removal of the managerʼs split focus and the potential for conflicts.
We discuss each of these in turn below.
32
Smoother Lease Expiry Profile
The merging of PFI and DPF smooths out the lease expiry profile, particularly the high proportion of
PFIʼs leases that expire in 2016 and 2017, but also to a lesser extent DPFʼs expiries in 2015 and
2019. In the Merged Group no more than 13% of leases expire in any one year for the next nine
years, compared to PFIʼs high lease expiries of 22% and 17% in 2016 and 2017 respectively. This
smoother lease expiry profile is expected to reduce the risk and improve the stability of earnings and
cash distributions.
Complementary Tenant Profiles
The tables below show the top 10 tenants and their contract rent (at 31 March 2013) for DPF, PFI and
the Merged Group.
DPF - Top 10 Tenants PFI - Top 10 Tenants Merged Group - Top 10 Tenants
Contract Rent Contract Rent Contract Rent % Rental
at 31 March 2013 at 31 March 2013 at 31 March 2013 income
Fisher & Paykel Appliances Ltd 5,076,669 DHL Supply Chain (NZ) Ltd 2,281,036 Fisher & Paykel Appliances Ltd 5,076,669 7.6%
Goodman Fielder Ltd 2,305,011 Fletcher Building 2,219,520 Fletcher Building 2,905,770 4.4%
Sinclair Knight Merz Ltd 2,228,927 Wickliffe NZ Ltd 1,756,167 Goodman Fielder Ltd 2,305,011 3.5%
Southern Spars Holdings Ltd 1,438,038 Pharmacy Retailing (NZ) Ltd 1,624,083 DHL Supply Chain (NZ) Ltd 2,281,036 3.4%
Nestle NZ Ltd 1,190,922 Brambles New Zealand Ltd 1,402,965 Sinclair Knight Merz Ltd 2,228,927 3.4%
Lion Liquor Property Division 1,153,559 Mainfreight Ltd 1,081,841 Wickliffe NZ Ltd 1,756,167 2.6%
SCA Hygiene Ltd 1,000,000 Polarcold Stores Limited 1,080,000 Pharmacy Retailing (NZ) Ltd 1,624,083 2.4%
Yakka NZ Ltd 935,714 Electrolux (NZ) Limited 1,006,654 Southern Spars Holdings Ltd 1,438,038 2.2%
Carter Holt Harvey Ltd 906,103 Transportation Auckland Corporation Ltd 924,261 Brambles New Zealand Ltd 1,402,965 2.1%
Massey University 883,458 New Zealand Comfort Group Ltd 828,804 Carter Holt Harvey Ltd 1,310,503 2.0%
Top 10 Tenants 17,118,400 Top 10 Tenants 14,205,331 Top 10 Tenants 22,329,169 33.6%
Other 15,832,203 Other 19,308,557 Other 44,135,322 66.4%
Total 32,950,603 Total 33,513,888 Total 66,464,491 100%
Source: Management information, 31 March 2013
There is very little overlap between the two tenant groups. Of the tenants in either top 10 list, only
Fletcher Building and Carter Holt Harvey are tenants of both funds, which is why their rent figures are
higher in the Merged Group list.
33
Because of the low level of tenant overlap, the exposure to any individual tenant approximately halves
in percentage terms as a result of the Merger. For example, Fisher & Paykel Appliances drops from
15.4% of DPFʼs rental income to 7.6% of the Merged Group. Overall, the exposure to the top 10
tenants drops to 33.6% as shown in the following charts below.
The greater spread of tenants, and the lower percentage exposure to each tenant, reduces risk in the
Merged Group relative to PFI and DPF on a stand-alone basis.
Operational Benefits of Scale
There are a number of operational benefits from the increased scale created by the Merger.
Firstly, there is greater diversity of, and lower percentage exposure to, individual tenants or
properties. As discussed above, exposure to individual tenants is approximately halved. Similarly,
the exposure to individual properties is materially reduced. This benefit is somewhat greater for DPF,
which has a relatively higher exposure to its top five tenants and properties.
Secondly, by becoming one of the largest industrial property LPVs in Auckland, the Merged Group is
likely to have an enhanced ability to attract and retain tenants. Its strong market position means it is
more likely to be approached by prospective tenants, and is more likely to be able to provide solutions
that meet the needs of new and existing clients.
Thirdly, the Merged Groupʼs larger balance sheet means it should be able to undertake more and/or
larger capital projects. This may assist the Merged Group to take advantage of opportunities and
potentially capture the margin associated with these opportunities.
Fourthly, there are expected to be procurement benefits as a result of greater buying power (e.g.
insurance and maintenance contracts). While these benefits will flow to tenants, the lower expenses
will enable the Merged Group to provide a lower total cost of occupancy, thereby increasing its
competitiveness.
Management Focus
Currently the same management team is managing the PFI and DPF funds separately. The Merger
would remove any risk going forward of a divided focus or conflicts of interest in managing the
portfolios.
34
WALT and Average Building Age
All of the above portfolio or operational benefits of the Merger would be shared by both shareholder
groups. Certain other portfolio metrics, such as WALT and average building age, improve for PFI
shareholders and weaken for DPF shareholders.
The averaging effect of the Merger improves WALT for PFI from 4.8 years to 5.6 years, and reduces
WALT for DPF from 6.4 years to 5.6 years.
Conclusion on Portfolio / Operational Impacts
Deloitte concludes that there would be portfolio and operational benefits from the Merger, and that
these benefits would be shared by both shareholder groups. Although these benefits do not give rise
to immediately identified cost synergies or revenue enhancements, they should reduce the risk and
volatility of earnings and/or enhance the Merged Groupʼs market position and competitiveness.
Notable benefits for PFI are the reduction in its exposure to high lease expiries in 2016 and 2017. In
addition, PFI shareholders would enjoy an improvement in WALT and average building age.
DPFʼs shareholders, conversely, would see the WALT reduce and average building age increase.
However DPF gains relatively more benefit than PFI from the reduction in exposure to individual
tenants and properties. We also note that DPFʼs current NTA, and therefore the Merger terms, reflect
(among other things) DPFʼs current strength in terms of WALT and average building age (i.e. the
market values which underpin DPFʼs NTA already capture these benefits).
6.3. Liquidity and Other Capital Markets Impacts
Current Liquidity of PFI and DPF Shares
Relative to other LPVs, both PFI and DPF have low liquidity (see sections 3.7 and 4.7) and low
institutional ownership.
Currently, it is estimated that institutions hold approximately 21.1% of the shares in PFI compared to
the LPV sector average institutional ownership of 36.3%. DPF does not have any institutional
ownership at present.
The daily average value of PFI shares traded over the last two years is $158,000, or 0.06% of the
shares on issue. This compares to the LPV sector average of $572,000 or 0.10%.
Being unlisted, DPF has significantly lower liquidity with an average of $38,000 or 0.02% of the share
capital traded on an average day over the past two years.
35
Liquidity of Merged Group
The Merger is expected to increase PFIʼs market capitalisation to over $500 million (as long as the
PFI share price exceeds $1.22). Its ranking in the NZX50 is expected to rise from 42nd to 29th place,
and it will rise from 7th to 5th in the New Zealand Property Index.
Based on an analysis of shareholding registers, institutions in New Zealand have an estimated $2,100
million invested in LPVs (although we note that it is difficult to accurately categorise shareholdings
due to the use of custodians). In some LPVs (e.g. Kiwi Income Property Trust), institutions hold more
stock than the theoretical index weighting implied by the LPVʼs market capitalisation. In others, such
as PFI and Vital Healthcare Properties, institutions are “underweight” as shown in the chart below.
If institutions simply maintained their current underweight exposure to PFI, the increase in free-float
market capitalisation would be expected to generate additional institutional demand for PFI shares of
approximately $55 million. This would be expected to boost the liquidity of PFIʼs shares.
However the improvement in PFIʼs index rankings may generate additional investor interest, improved
broker analyst coverage, and potentially an upward revision of investment weightings by institutions.
If, for example, institutions adopted an index weighting position in the Merged Group, then this would
generate a requirement to hold approximately $195 million of PFI shares, approximately $130 million
more than they currently hold in PFI.
It is impossible to predict whether, and to what extent, PFIʼs liquidity would improve as a result of the
Merger. However based on the factors discussed above Deloitte believes it is reasonable to expect
that PFIʼs liquidity will improve.
36
Liquidity Benefits for DPF Shareholders
The Merger is expected to significantly improve the liquidity of DPF shareholdersʼ investments.
Currently, DPFʼs shares trade in small volumes, effectively at a managed price close to NTA. While
this has worked reasonably well in the past when perceptions of market value have been close to
NTA, problems arise if the market values materially diverge from NTA. For example:
• there are no DPF sellers at adjusted NTA in the current market environment of LPV share
prices materially above NTA; and
• if future economic conditions were to drive market values below NTA, there would be no
liquidity for sellers at an NTA-based price.
The Merger would overcome these issues, with investors receiving shares in a large NZSX-listed
company, with true market price discovery and trading. This should provide greater liquidity to DPF
shareholders across the range of possible economic conditions.
Other Capital Markets Benefits
The Merged Groupʼs enlarged capital base (allied to improvements in liquidity and index ranking) may
improve its access to equity and debt capital markets, and potentially lower its overall cost of capital.
For example:
• the increase in scale of the Merged Group has enabled PFIM to negotiate a lower margin on
a portion of its debt (conditional on the Merger proceeding);
• the Merged Group may have an increase in possible sources of debt finance; and
• the lower exposure to individual tenants and smoother lease expiry profile should lead to
investors attributing lower risk to the companyʼs earnings forecasts.
Conclusion on Liquidity and Other Capital Markets Impacts
Deloitte concludes that it is reasonable to expect the Merger to lead to improved liquidity for PFI
shareholders, and that DPF shareholders are likely to benefit from significantly improved liquidity.
Through its enhanced scale, capital base and liquidity, the Merged Group may also have improved
access to equity and debt capital markets compared to either PFI or DPF currently. This may have
the benefit of reducing the cost of capital.
It is also worth noting that these expected liquidity and other capital markets benefits of the Merger
would be achieved without the need for external capital raisings, which would likely be more
expensive and price dilutive than the Merger.
37
6.4. Financial Impacts
In considering the financial impacts of the Merger, we have focused on the following key metrics:
• NTA per share;
• Possible market value per share;
• Gearing levels;
• Forecast/Pro Forma FY13 distributable earnings per share; and
• Normalised FY13 DPS.
Although we have referred to NTA or earnings per share above, in fact we have analysed the impact
on a notional $100,000 investment in PFI or DPF, to facilitate comparisons between the shareholder
groups.
In undertaking our analysis we have assumed that shares in PFI and DPF can be bought or sold at
the same values that were used in setting the exchange ratio (i.e. $1.2384 or 109% of adjusted
February 2013 NTA per share for PFI, and $152.5902 or 104% of adjusted NTA per share for DPF).
We then discuss in section 6.5 whether our analysis and conclusions are affected by the recent rise in
the share prices of PFI and other LPVs.
NTA and Market Value

Adjusted NTA (as at February 2013)
$000s PFI DPF Merged Group % Change

Summary Balance Sheet
Property assets 376,802 405,117 781,919
Debt (112,600) (166,000) (291,698)
Net other assets (7,572) (9,934) (9,462)
Merger adjustments (6,215) (1,641) (7,857)
Adjusted NTA 250,414 227,542 472,903
# shares 220,410,728 1,550,842 411,502,391
NTA / share ($) 1.14 146.72 1.15
Gearing % 29% 41% 37%
$100,000 invested in PFI at $1.24/share
# shares held 80,751 80,751
Share of NTA ($)1 91,743 92,800 1.2%
$100,000 invested in DPF at $152.59/share
# shares held 655 80,751
Share of NTA ($)1 96,154 92,800 -3.5%
Value of new PFI shares at $1.24 ($) 100,000
1 Number o f shares held times NTA per share
So urce: M anagement info rmatio n, Delo itte analysis
The table uses balance sheet figures for PFI and DPF that are consistent with the adjusted NTA
figures used to calculate the Merger ratio (see section 5.8). The table shows that a $100,000 investor
in PFI could acquire 80,751 shares at $1.2384 per share, and that this shareholding would represent
$91,743 of PFIʼs adjusted NTA. This investor would continue to hold 80,751 shares in the Merged
Group, with the shareholding then representing $92,800 of NTA.
38
Similarly, a $100,000 investor in DPF could acquire 655 shares at $152.59 per share, and this
shareholding would represent $96,154 of DPFʼs adjusted NTA. In the Merger these shares would be
exchanged for 80,751 new PFI shares, and the investor would then have the same interest in the
Merged Groupʼs NTA as the PFI investor ($92,800).
As shown in the table, the PFI shareholderʼs interest in NTA increases by 1.2% as a result of the
Merger, while the DPF shareholderʼs NTA is diluted by 3.5%. This is a direct result of the share
exchange ratio being established based on the ratio of 109% PFI NTA to 104% DPF NTA.
Although the NTAs of PFI and DPF are broadly similar, the percentage accretion/dilution figures
above are not symmetrical because total NTA drops by approximately $5.0 million in the Merger. This
is due mainly to a reduction in deferred tax relating to the close-out of the DPF swaps and, to a lesser
extent, transaction costs.
Although DPF shareholders experience dilution in NTA, the market value of their investment will be
preserved if PFI shares continue to trade at $1.24 after the Merger. This is shown in the last line of
the table above, where the value of the DPF shareholderʼs 80,751 shares at $1.2384 is $100,000, the
assumed value of the original investment in DPF.
The Merger in effect provides DPF shareholders with the opportunity to swap unlisted shares, which
over the period 2011 – 2012 typically traded (in small volumes) at a 4% premium to NTA, for listed
PFI shares which over the same period traded at an average 9% premium to NTA. With the Merger
ratio set on that basis, there is no negative value impact for DPF shareholders as long as the Merged
Groupʼs shares continue to trade 5% higher (relative to NTA) than the DPF share price if it remained a
stand-alone entity.
We believe it is reasonable to expect this to be the case. For any given set of macro-economic and
sharemarket conditions, the much greater liquidity of the Merged Group relative to DPF stand-alone,
combined with the portfolio/operational benefits of the Merger, mean that the Merged Groupʼs shares
are likely to trade at least 5% higher (relative to NTA) than the fair value of DPFʼs unlisted shares after
applying a discount for illiquidity. This issue is discussed further in section 6.5.
Gearing
The table above also shows the impact of the Merger and the buy-out of the DPF swaps on gearing,
as if the Merger occurred at 28 February 2013. PFIʼs gearing would rise from 29% to 37%, while
DPFʼs would drop from 41% to 37%. Because of the acquisition of the Bowden Road property in
March 2013, PFIʼs gearing at 31 March 2013 was 33%, and the gearing of the Merged Group as at
that date would be 38%.
Total debt in the Merged Group is approximately $13.1 million higher than the sum of PFIʼs and DPFʼs
debt on a stand-alone basis. This is primarily due to a decision to buy out the current DPF interest
rate swap book prior to the Merger. This has a cash cost (reflected in the Merged Groupʼs debt level)
but no impact on NTA (because the increase in debt is offset by a reduction in the value of hedge
liabilities). The associated cash benefit of buying out the DPF swaps is a reduction in the Merged
Groupʼs cash interest expense and therefore higher DPS going forward.
The chart in section 2.3 shows that PFI and DPF have relatively low and high gearing, respectively,
within the property fund sector, with the market average being closer to 36%. The Merged Group will
have gearing of 39% (including the impact of the DPF swaps buy-out) at current portfolio values.
39
We discuss below the effect of the Merger on distributable earnings per share, and highlight that the
change in each fundʼs gearing is an important factor explaining the dilution or accretion in DPS. Such
gearing-related impacts should be viewed primarily as value-neutral trade-offs between financial risk
and yield per share. Nevertheless, some shareholders may perceive the gearing changes as
beneficial:
• DPFʼs higher current gearing restricts its ability to grow via debt funded acquisitions and
without the Merger further growth would require raising equity capital; and
• PFIʼs shareholders will experience a gearing-related increase in DPS.
Distributable Earnings
The table below shows the impact of the Merger on Pro Forma FY13 distributable earnings. As for
NTA, we assess the impact on a notional $100,000 invested in PFI or DPF, and the interest those
investments have in distributable earnings.
Pro-Forma FY13 Distributable Earnings

Summary Financial Performance
Net operating income 27,837 27,812 55,763
Interest expense (8,646) (11,498) (17,359)
Cash tax (4,266) (2,868) (7,938)
Non-cash adjustments (379) (19) (398)
Distributable earnings 14,545 13,428 30,069
# shares 220,410,728 1,550,842 411,502,391
DPS (DPF $; PFI cents) 6.60 8.66 7.31
$100,000 invested in PFI at $1.24
# shares 80,751 80,751
Share of distributable earnings ($) 5,329 5,901 10.7%
$100,000 invested in DPF at $152.59
# shares 655 80,751
The table shows that as a result of the Merger and the close-out of DPFʼs swaps, distributable
earnings increases by 10.7% for PFI shareholders, and by 4.0% for DPF shareholders. The main
reason both figures are positive is because buying out the DPF swaps reduces cash interest expense
and increases distributable earnings in the Merged Group by approximately $2.1 million.
These accretion figures indicate the actual FY13 impact on DPS (on a Pro Forma, full year basis)
expected from the combination of the Merger and the DPF swaps close-out. However in Deloitteʼs
view these earnings accretion figures do not provide a clear picture of the economic impacts of the
Merger, for the following reasons:
• the DPF swaps close-out is a trade-off between up-front cost (increased debt) and higher
earnings (lower interest expense) going forward that could be achieved by DPF on a stand-
alone basis, and therefore should be separated from the analysis of the Merger;
40
• the reduction in gearing for DPF shareholders, and the increase in gearing for PFI
shareholders, are important factors in the observed changes in DPS, but again the gearing
changes could be achieved on a stand-alone basis and are best seen as value-neutral trade-
offs between financial risk and earnings yield; and
• the FY13 forecasts for PFI and DPF used in the table above are not necessarily
representative of their normal maintainable earnings.
We believe it is important to consider the impact of the Merger after “normalising” for all of these
factors.
Normalised Distributable Earnings
We have made the following normalisation adjustments:
• removed the impact of the swap close-out from the Merged Group figures (i.e. as if it does not
occur), because the close-out is occurring at fair value and is therefore a value-neutral trade-
off between future cashflow (lower interest expense) and current cash cost (higher debt);
• for similar reasons as the removal of the swap close-out, we have normalised the hedging
profile of each of the stand-alone entities (by making them both equivalent to the hedging
profile of the Merged Group without the DPF swaps close-out);
• we have assumed that, prior to the Merger, PFI and DPF adjust their gearing to 35.8%, the
Merged Groupʼs gearing without the DPF swaps close-out. To achieve this gearing change
PFI is assumed to buy back shares at $1.2384, and DPF to issue shares at $152.59 (being
the share prices used in setting the Merger ratio, and which are close to the trading prices
prevailing in February 2013);
• the occupancy levels (PFI 98.2%; DPF 96.3%) are normalised to the average of the two funds
(97.2%);
• the abnormal rental provision of $435,000 in the FY13 forecasts for DPF and the Merged
Group is removed;
• the level of rent revenue relative to market rents (PFIʼs 2013 rent is expected to be 1.4%
lower than market rents; DPFʼs 2013 rent is expected to be 2.9% higher than market rents)
are normalised to the market rents as assessed by the property valuers; and
• the timing differences in each fundʼs tax calculations are normalised to the same level.
41
The table below reflects all of these normalisation adjustments as if they were immediately and fully
achieved in FY13. The first five adjustments are changes that could be undertaken immediately or
could be attained within one to two years. However the last two adjustments could take many years to
achieve.
Normalised Pro-Forma FY13 Distributable Earnings (Equivalent Hedging, Gearing and Operational Metrics)

Summary Financial Performance
Net operating income 27,873 27,666 55,654
Interest expense (9,959) (10,236) (20,039)
Cash tax (3,980) (3,186) (7,241)
Non-cash adjustments - - -
Distributable earnings 13,934 14,245 28,374
# shares 202,458,763 1,688,705 411,502,391
DPS (DPF $; PFI cents) 6.88 8.44 6.90
$100,000 invested in PFI at $1.24
# shares 80,751 80,751
Share of distributable earnings ($) 5,557.72 5,567.89 0.2%
$100,000 invested in DPF at $152.59
# shares 655 80,751
The table shows that after normalising for hedging, gearing and certain operational metrics, the
Merger is slightly earnings accretive for both groups of shareholders. The main reason both figures
are positive is because the Merger results in administrative cost savings of $145,000 (discussed in
section 5.5) and slightly lower borrowing margins resulting in a $156,000 interest saving. This means
the Merged Groupʼs distributable earnings are higher than the sum of the two stand-alone entities.
Because two of our operational normalisations above would take several years to eventuate, and
taking into account the direction and scale of the impacts of these two normalisations, we conclude
that the normalised outcome over the first few years after the Merger should on average be close to
earnings neutral for both sets of shareholders.
This outcome is as we would have expected. It reflects a combination of the underlying earnings yield
on the respective property portfolios and the impact of the Merger ratio. DPFʼs properties on average
have been valued using lower (firmer) yields than PFIʼs. In this sense they are viewed as lower risk /
higher value properties. A merger on a straight NTA-for-NTA basis would be expected to result in a
normalised earnings yield increase for DPF shareholders (due to the higher yield on PFIʼs portfolio),
and vice versa for PFIʼs shareholders. Such changes should not be characterised as one group of
shareholders gaining at the otherʼs expense, but rather as being value-neutral, with any change in
earnings yield being offset by a change in the risk characteristics of the portfolio (as judged by
property valuers and reflected in their capitalisation rates).
The key issue for this Merger is that the earnings accretion / dilution that would otherwise be expected
is offset by the Merger ratio (i.e. the Merger is not on an NTA-for-NTA basis, but on a 104% DPF
NTA:109% PFI NTA basis). This 5% “tilt” in the Merger ratio means that, for example, the average
normalised outcome for DPF shareholders is approximately earnings neutral, rather than the
accretion of approximately 2.5% they would expect in a straight NTA-for-NTA merger.
As discussed in the NTA sub-section above, and in section 6.5 below, this outcome is best seen as a
trade-off for DPF shareholders achieving materially greater liquidity as a result of the Merger (and a
share of the portfolio / operational benefits).
42
Conclusion on Financial Impacts
Deloitteʼs analysis of the financial impacts of the Merger can be summarised as follows:
• the Merger dilutes DPF shareholdersʼ adjusted NTA by 3.5%, mainly due to the 5% tilt in the
Merger ratio in favour of PFI;
• however the value of DPF shareholdersʼ investment is maintained as long as the PFI shares
they receive in the Merged Group continue to trade at a premium (relative to NTA) 5% or
more above the equivalent DPF share value on a stand-alone, unlisted basis. Deloitte
believes this is likely to be the case, after applying a discount for illiquidity in the DPF share
value;
• after normalising for differences in hedging, gearing and certain operational metrics, we
expect the impact on earnings yield to be approximately neutral for both sets of shareholders
on average over the first few years after the Merger; and
• if the Merger was done on a straight NTA-for-NTA basis, we would have expected the Merger
to be normalised earnings accretive for DPF and dilutive for PFI, due to the differences in the
portfoliosʼ underlying yields. The 5% tilt in the Merger ratio offsets this effect.
Deloitte concludes that there are no material negative impacts to either group of shareholders as a
result of the Merger. While DPF shareholders experience NTA dilution, the value of their investment
is expected to be preserved. The Merger is expected to be broadly earnings neutral for both groups
of shareholders (on a normalised basis, and on average over time). To the extent that this outcome is
influenced by the Merger ratio (when otherwise DPF shareholders might expect some earnings
accretion) that is best seen as a trade-off for the materially higher liquidity achieved by DPF
shareholders as a result of the Merger.
6.5. Impact of Recent PFI Share Price Increase
As set out in section 5.8, the Merger exchange ratio was based on February NTAs for PFI and DPF
(adjusted for recent revaluations, and excluding intended dividends) plus premiums of 9% and 4%
respectively. Among other factors considered in setting the Merger ratio, the 9% reflected PFIʼs share
trading premium, and the 4% reflected the way DPF historically adjusted NTA in setting its share price
(i.e. by excluding the value of its hedge liabilities and dividends payable).
With PFI shares recently trading at $1.34 (as at 24 April 2013), an 18% premium to NTA, and with no
trading currently in DPF shares, the question arises as to whether the Merger ratio is still appropriate
and whether our analysis above of the financial impacts of the Merger is still valid.
In our view, the recent increase in PFIʼs share price is not a reason to change the Merger ratio and
does not invalidate our analysis above. Movements in PFIʼs share price are likely to have been
matched by similar movements in the underlying value of DPFʼs shares. The increase in PFIʼs share
price since February is consistent with increases for other LPVs and the share market generally (i.e.
the drivers are likely to be broad-based and macro-economic in nature). Also, PFIʼs share price is
predominantly a reflection of the marketʼs perception of the value of its underlying properties and the
return from those properties. It follows that the factors that have caused PFIʼs share price to rise are
likely to have had a similar impact on the value of DPFʼs properties, thereby maintaining the relatively
between the value of PFIʼs and DPFʼs shares.
43
The key issue, therefore, is not the absolute level of PFIʼs share price, but whether the 5% difference
between PFIʼs and DPFʼs value in setting the Merger ratio has been maintained. Given PFIʼs greater
liquidity, and the costs and uncertainty associated with DPF endeavouring to achieve PFIʼs level of
liquidity and share price premium to NTA via listing itself on the NZSX, we believe it is reasonable to
value DPFʼs shares (on a stand-alone, unlisted basis) at a 5% discount to the equivalent PFI share
price.
6.6. Alternatives to the Merger
In assessing the merits of the Merger, it is necessary to consider whether there are any alternatives
available to either shareholder group that are superior to the Merger.
The main alternatives would be:
(i) the status quo (no transaction of any type occurs);
(ii) DPF undertakes an initial public offering and lists on the NZSX;
(iii) DPF sells its shares to another purchaser at a higher price; or
(iv) PFI buys other industrial properties at lower prices.
We consider each of these options in turn below.
Status Quo
In the status quo, the portfolio/operational benefits and liquidity/capital markets benefits discussed in
sections 6.2 and 6.3 would be foregone. For this reason, and because the Merger in our view does
not have any material negative financial impacts, we do not believe the status quo is superior to the
Merger.
DPF Lists Alone
Listing by itself might address some of DPFʼs liquidity issues, and help reduce gearing if accompanied
by a capital raising. However:
• the portfolio/operational benefits of the Merger would be foregone;
• DPFʼs liquidity would likely be lower than could be achieved under the Merger;
• the market is likely to question the logic of having a second relatively small listed industrial
property fund, and be concerned about the potential for management conflicts of interest; and
• for DPF shareholders to be better off in simple share value terms, the shares would need to
trade higher than a 5% discount to PFI (e.g. above a 13% premium to NTA compared to PFIʼs
premium of 18% as at 24 April 2013). Given the factors noted above, the costs of the listing
process, and the lack of track record as a listed entity, we do not believe this is likely to occur.
44
DPF Sells Shares to Higher Bidder
DPF has not run a sale process to determine if there is an alternative buyer for its portfolio willing to
pay a higher price than implied by the Merger. This is understandable given the common
management of DPF and PFI, and the commercial logic of the Merger. However it is necessary to
consider whether a better price is potentially available to DPF shareholders. Deloitte doubts whether
this is likely because:
• other possible buyers are unlikely to have as strong a commercial rationale to acquire DPFʼs
assets as PFI;
• no such buyer has emerged since the Merger was announced; and
• given PFIʼs current share price, an alternative bidder for DPFʼs shares would need to pay a
premium of more than 13% above NTA.
We also note that the Merger would leave DPF shareholders holding liquid shares in an entity with no
controlling shareholder blocks. It follows that DPF shareholders can individually sell at any time they
wish, and also that the opportunity for other parties to pay a control premium in future to take over PFI
would still exist.
PFI Buys Other Properties at Lower Prices
PFI will frequently have opportunities to acquire individual properties for prices at or close to
valuation. However there is no other industrial property portfolio of the scale or strategic fit offered by
DPF. The premium to NTA paid for DPF that is implicit in the Merger terms reflects the
transformational nature of the transaction for PFI in terms of portfolio/operational and liquidity
benefits.
45
6.7. Conclusion on the Merits of the Merger
We conclude that the Merger has merit for both PFIʼs and DPFʼs shareholders, for the following
reasons:
• the Merger provides a number of portfolio or operational benefits to both sets of shareholders,
such as smoothing out the lease expiry profile, and reducing the percentage exposure to
individual tenants and properties;
• the Merger is expected to improve the liquidity of PFI shares, greatly improve liquidity for DPF
shareholders, and potentially improve PFIʼs access to and cost of capital;
• there are no material negative financial impacts for either shareholder group:
− while the Merger dilutes DPF shareholdersʼ NTA, it is expected to preserve the
market value of DPF shareholdersʼ investment;
− the combination of the Merger and the buy-out of DPFʼs swaps is earnings accretive
for both shareholder groups (although most of the accretion is due to the swaps buy-
out, which has an associated cost reflected in higher debt levels);
− after removing the impact of the DPF swaps buy-out, and other normalisation
adjustments, the Merger is expected to be broadly earnings neutral for both
shareholder groups (on average over time); and
− while the NTA and earnings outcomes for DPF shareholders would have been better
but for the 5% tilt in the Merger ratio, we believe this is a reasonable trade-off for the
materially greater liquidity they will likely achieve in the Merger (and a share of the
other Merger benefits).
• the recent increase in PFIʼs share price does not, in our view, invalidate the Merger ratio or
our analysis of the financial impacts of the Merger, because the underlying market value of
DPFʼs shares has likely increased in a similar manner; and
• there do not appear to be any viable alternatives for either shareholder group that are
superior to the Merger.
46
7. Fairness of the Merger
7.1. Fairness of the Merger
Having concluded that the Merger has merit for both groups of shareholders, we now consider
whether the benefits of the Merger are fairly split.
The impacts of the Merger range across a variety of operational, capital markets and financial
considerations. It is impossible to create a single metric to distil these benefits and measure how they
have been split. Instead, we have considered each category of impact separately and then assess
whether the benefits appear to be evenly shared. In summary:
• the portfolio / operational benefits are shared in roughly equal measure (PFI benefits most in
the smoothing of lease expiries, and enjoys improvements in WALT and property age; DPF
benefits most from reduced tenant and property concentration);
• both shareholder groups are expected to benefit from increased liquidity in their shares, but
DPF shareholders should enjoy a greater improvement; and
• while the Merger ratio leads to a dilution of DPF shareholdersʼ NTA, share value and
(normalised) earnings are preserved for both shareholder groups.
The following table summarises our assessment of the impacts of the Merger for each shareholder
group.
Summary of Merger Impacts

PFI DPF
Shareholders Shareholders
Portfolio / Operational
Smoother lease expiry profile
Reduced tenant / property concentration
Stronger market position
Higher WALT; lower age properties x
Focussed manager; no conflicts
Liquidity / Capital Markets
Improved share liquidity
Improved capital access
Financial
Preserves NTA x
Preserves share value
Preserves normalised DPS
47
While DPF shareholders experience a reduction in WALT and average building age, it is important to
note that their portfolioʼs strengths in these areas are reflected in DPFʼs NTA and are therefore
captured in the Merger terms. Also, the NTA dilution experienced by DPF shareholders is in our view
not as important as the preservation of the market value of their investment and the materially greater
liquidity achieved by the Merger.
Taking the above factors into account, we conclude that the benefits of the Merger are fairly split
between the shareholder groups.
As discussed in section 6.5, given PFIʼs greater liquidity, and the costs and uncertainty associated
with DPF endeavouring to achieve PFIʼs level of liquidity and share price premium to NTA via listing
itself on the NZSX, we believe it is reasonable to value DPFʼs shares (on a stand-alone, unlisted
basis) at a 5% discount to the equivalent PFI share price. The directors of PFI and DPF took these
and other factors into account when negotiating the Merger ratio. In our view the Merger ratio also
appears reasonable based on the expected outcomes of the Merger being fair to both groups of
shareholders.
7.2. Management Fee Change for DPF Shareholders
Finally, we consider whether the management fee changes that DPF shareholders will experience if
the Merger proceeds are fair.
The Merged Group will continue to be managed by PFIM under the Management Agreement. Part of
the Scheme of Arrangement is a proposal to change the thresholds used for calculating the base fee
under this agreement (see section 5.3 of this report, and section 4 of the Information Memorandum).
PwC have prepared an Independent Appraisal Report opining on this proposal from the perspective of
PFIʼs shareholders. The PFI shareholders will be asked to vote on the proposal (resolution 2 in the
Notice of Meeting).
Under the Merger, DPF shareholders will become PFI shareholders and will be subject to the PFI
management fee arrangements, in particular:
• the new PFI base fee calculation; and
• the existing PFI performance fee structure (there is no performance fee in the current DPF
management agreement).
The PFI performance fee calculation is described in section 3.3.
We believe the management fee changes are fair to DPF shareholders, because:
• the base fee paid currently by DPF is $2.8 million. Under the Merger, the proportion of the
base fee that DPF shareholders will pay is $2.2 million;
• the marginal fee (on additional total assets excluding goodwill) drops from 0.45% per annum
under the DPF fee structure to 0.35% per annum;
• the performance fee is only payable if total shareholder returns exceed the 10% per annum
threshold, and only after any accumulated underperformance over the previous two years has
been reversed; and
• the combination of a lower marginal base fee and a performance fee better aligns the
managerʼs interests with those of shareholders, and is consistent with trends in property
management fee structures in recent years.
48
8. Information, Disclaimer and
Indemnity
8.1. Sources of Information
The statements and opinions expressed in this report are based on the following main sources of
information:
• the PFI and DPF annual reports for the financial years 2006 to 2012;
• valuations of the PFI and DPF portfolio properties as at 31 December 2012 and 31 March
2013, respectively prepared by Colliers, CBRE and Jones Lang LaSalle;
• property statistics for PFI, DPF and the Merged Group as at 31 March 2013;
• the term sheet for the proposed Merger of PFI and DPF;
• a presentation on the proposed Merger prepared by the manager;
• the PFI and DPF Management Agreements;
• the proposed Management Agreement for the Merged Group;
• First NZ Capital analyst reports on the New Zealand property industry;
• First NZ Capital report on the estimated costs of listing;
• First NZ Capital New Zealand LPV comparable analysis;
• financial forecast models of PFI, DPF and the Merged Group prepared by the manager;
• LPV share and share price data and property index data from Bloomberg Information
Services;
• share price data and company announcements from NZX;
• information on the LPV industry including industry studies, financial reports and brokersʼ
reports; and
• a draft Notice of Meeting and Information Memorandum in relation to the Merger.
During the course of preparing this report, we have had discussions with and/or received information
from the manager of PFI and DPF and their financial and legal advisers.
The Directors of PFI and DPF have confirmed that, for the purpose of preparing our Independent
Expert Report, we have been provided with all information relevant to the Merger that is known or
should have been known to them and that all the information is true and accurate in all material
aspects and is not misleading by reason of omission or otherwise.
49
Including this confirmation, we have obtained all the information that we believe is necessary for the
purpose of preparing this Independent Expert Report.
In our opinion, the information set out in the Information Memorandum and this Independent Expert
Report is sufficient to enable the shareholders of PFI and DPF to understand all the relevant factors
and to make an informed decision in respect of the Merger.
8.2. Reliance on Information
In preparing this report we have relied upon and assumed, without independent verification, the
accuracy and completeness of all information that was available from public sources and all
information that was furnished to us by the manager of PFI and DPF and their advisors.
We have evaluated that information through analysis, enquiry and examination for the purposes of
preparing this report but we have not verified the accuracy or completeness of any such information
or conducted an appraisal of any assets. We have not carried out any form of due diligence or audit
on the accounting or other records of PFI and DPF. We do not warrant that our enquiries would
reveal any matter which an audit, due diligence review or extensive examination might disclose.
8.3. Disclaimer
We have prepared this report with care and diligence and the statements in the report are given in
good faith and in the belief, on reasonable grounds, that such statements are not false or misleading.
However, in no way do we guarantee or otherwise warrant that any projections or forecasts of future
profits, cash flows or financial position of PFI, DPF or the Merged Group will be achieved. Forecasts
and projections are inherently uncertain. They are predictions of future events that cannot be
assured. They are based upon assumptions, many of which are beyond the control of the Directors
and manager of PFI and DPF. Actual results will vary from the projections and forecasts and these
variations may be significantly more or less favourable.
We assume no responsibility arising in any way whatever for errors or omissions (including
responsibility to any person for negligence) for the preparation of the report to the extent that such
errors or omissions result from our reasonable reliance on information provided by others or
assumptions disclosed in the report or assumptions reasonably taken as implicit.
Our evaluation has been arrived at based on economic, interest rate, market and other conditions
prevailing at the date of this report. Such conditions may change significantly over relatively short
periods of time. We have no obligation or undertaking to advise any person of any change in
circumstances which comes to our attention after the date of this report or to review, revise or update
our report.
We have had no involvement in setting the terms of the proposed Merger or in the preparation of the
Information Memorandum issued by PFI and DPF and we have not verified or approved the contents
of the Information Memorandum. We do not accept any responsibility for the contents of the
Information Memorandum except for this report.
50
8.4. Indemnity
PFI and DPF have agreed that, to the extent permitted by law, they will indemnify Deloitte and its
partners, employees and consultants in respect of any liability suffered or incurred as a result of or
directly in connection with the preparation of this report. This indemnity does not apply in respect of
any fraud by Deloitte. PFI and DPF have also agreed to indemnify Deloitte and its partners,
employees and consultants for time incurred and any costs in relation to any inquiry or proceeding
initiated by any person. Where Deloitte or its partners, employees and consultants are found liable for
or guilty of fraud, Deloitte shall reimburse such costs.
51
9. Qualifications, Independence, and
Consent
9.1. Qualifications and Expertise
Deloitte is one of the worldʼs leading professional services firm. Deloitteʼs Corporate Finance practice
provides strategic advisory, valuation and transaction support services.
The persons involved in preparing this report are Chas Cable (MSc (Hons), BSc), Alan Dent (CA,
BCA), and Simon Chapman (CFA, CA, PGDipCom, BCom).
Deloitte Corporate Finance, Mr Cable, Mr Dent and Mr Chapman have significant experience in the
independent investigation of transactions and issuing opinions on the merits and fairness of the terms
and financial conditions of transactions.
9.2. Independence
Deloitte is not the auditor of PFI or DPF.
Deloitte has not had any part in initiating or setting the terms of the Merger.
Deloitte will receive a fee for the preparation of this report. This fee is not contingent on the
conclusions of this report or the outcome of the voting in respect of the Merger. We will receive no
other benefit from the preparation of this report. We do not have any conflict of interest that could
affect our ability to provide an unbiased report.
Advanced drafts of this report were provided to the manager and Directors of PFI and DPF. Certain
changes were made to the drafting of the report as a result of the circulation of the drafts. However,
there were no material alterations to any part of the substance of this report, including the
methodology or conclusions, as a result of issuing the drafts.
Our terms of reference for this engagement did not contain any term which materially restricted the
scope of the report.
9.3. Consent
Deloitte consents to the issuing of this report, in the form and context in which it has been prepared,
to the shareholders of PFI and DPF. Neither the whole nor any part of this report, nor any reference
thereto may be included in any other document without Deloitteʼs prior written consent as to the form
and context in which it appears.
52
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by
guarantee, and its network of member firms, each of which is a legally separate and independent
entity. Please see www.deloitte.com/ about for a detailed description of the legal structure of Deloitte
Touche Tohmatsu Limited and its member firms.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients
spanning multiple industries. With a globally connected network of member firms in more than 150
countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the
insights they need to address their most complex business challenges. Deloitteʼs approximately
182,000 professionals are committed to becoming the standard of excellence.
Deloitte New Zealand brings together more than 900 specialists providing audit, tax, technology and
systems, strategy and performance improvement, risk management, corporate finance, business
recovery, forensic and accounting services. Our people are based in Auckland, Hamilton, Rotorua,
Wellington, Christchurch and Dunedin, serving clients that range from New Zealand's largest
companies and public sector organisations to smaller businesses with ambition to grow. For more
information about Deloitte in New Zealand, look to our website www.deloitte.co.nz
© 2013 Deloitte. A member of Deloitte Touche Tohmatsu Limited.
53
160 Lion – Beer, Spirits and Wine,
18 Ron Driver Place, East Tamaki, Auckland
Property For Industry Limited
Independent Appraisal Report

Regarding Proposed Changes to the
Management Agreement
20 May 2013
161
Contents
Page
Background ...................................................................................................................................................... 4
Requirements Under the NZSX Listing Rules ....................................................................................... 5
Purpose of Report ........................................................................................................................................... 6
Approach to Assessing the Fairness of the Proposed Changes to PFI’s Management ............
Agreement ............................................................................................................................................ 6
Declarations, Qualifications, Disclaimer and Restrictions ................................................................ 6
Independence .................................................................................................................................................. 6
1. Executive Summary ........................................................................................................................... 8
2. Overview of PFI & DPF and Proposed Merger ............................................................................... 10
Background .................................................................................................................................................... 10
Property Portfolios ....................................................................................................................................... 11
Ownership and Share Trading History .................................................................................................. 12
Governance ..................................................................................................................................................... 15
Management Agreement ............................................................................................................................ 16
Comparison of PFI’s and DPF’s Management Agreements............................................................. 17
Proposed Merger .......................................................................................................................................... 17
Property Metrics ........................................................................................................................................... 18
3. The Proposed Changes to the PFI Management Agreement ........................................................ 19
Background .................................................................................................................................................... 19
Changes to the Management Agreement .............................................................................................. 19
Conditions....................................................................................................................................................... 20
4. Assessment of the Proposed Changes to the PFI Management Agreement .............................. 21
Introduction ................................................................................................................................................... 21
Management Fee Structures for LPVs ................................................................................................... 21
LPVs Total Management Expenses Ratio ............................................................................................. 26
LPVs EBIT to Average Total Assets ........................................................................................................ 26
Other Consequences of the Proposed Merger ..................................................................................... 27
Appendix A – Statement of Independence, Disclaimer, Restrictions, Limitation of
Liability, and Indemnity ............................................................................................................... 30
Appendix B – Sources of Information ............................................................................................... 31
Property For Industry Limited Contents 2

20 May 2013
Glossary
ARG or Argosy : Argosy Property Trust
AUG or Augusta : Augusta Capital Limited
AUM : Assets under management
Board or the Directors : The Board of Directors of Property For Industry Limited
DNZ : DNZ Property Fund Limited
DPF : Direct Property Fund Limited
DPF’s Manager : DPF Management Limited
EBIT : Earnings before interest and tax
EBITDA : Earnings before interest, tax, depreciation and amortisation
EPS : Earnings per share
FYXX : The financial year ended 31 December 20XX
GMT : Goodman Property Trust
GST : Goods and services tax
IFRS : International Financial Reporting Standards
KIP : Kiwi Income Property Trust
LPVs : Listed property vehicles
LVR : Loan to Value Ratio
Management Agreement : The management contract dated 8 April 1994, including
subsequent deeds of variation, dated 19 October 1994,
30 April 1999, and 30 September 2001
MER : Management expense ratio, being total fund management
expenses divided by average total assets
Non-Associated Shareholders : Shareholders of PFI not associated with the Related Party
NPAT : Net profit after tax
NPT : NPT Limited
NTA : Net tangible assets
NZ IRFS : New Zealand International Financial Reporting Standards
NZX : New Zealand stock exchange
NZSX Listing Rules : The NZSX Listing Rules of the NZX Main Board
PCT : Precinct Properties New Zealand Limited
PFI or the Company : Property For Industry Limited
PFI’s Manager : PFIM Limited
PwC : PricewaterhouseCoopers
Related Party : PFI’s Manager
Report : Independent appraisal report in relation to the Proposed
changes to PFI’s Management Agreement
Shareholders : The shareholders of PFI
The Proposed Merger : The proposed amalgamation of PFI and DPF
Total Tangible Assets : Total Assets excluding goodwill
TSR : Total shareholder return, being change in share price plus any
dividends paid
VHP : Vital Healthcare Property Trust
VWAP : Volume weighted average price
WALT : Weighted average lease term
Property For Industry Limited Glossary 3

20 May 2013
The Independent Directors
Property for Industry Limited
Shed 24, Prince’s Wharf,
147 Quay Street
Auckland 1140
20 May 2013
Independent Appraisal Report in Relation to Proposed Changes to Property

For Industry Limited’s Management Agreement.
Background
1. On 15 April 2013 Property For Industry Limited (PFI or the Company) announced a proposal to
merge with Direct Property Fund Limited (DPF) whereby DPF shareholders will receive ordinary
shares in PFI, based on agreed relative values.
2. PFI is managed by PFIM Limited (PFI’s Manager) and DPF is managed by DPF Management
Limited (DPF’s Manager). PFI’s Manager is a wholly owned subsidiary of DPF’s Manager.
3. The merger will be effected by way of a Court approved scheme of arrangement pursuant to Part
XV of the Companies Act 1993 (the Proposed Merger).
4. Under the Proposed Merger, shareholders in DPF will receive approximately 123.22 shares issued
by PFI in exchange for each existing share held in DPF. The number of shares has been
calculated based on relative Net Tangible Assets (NTA) of DPF and PFI as at 28 February 2013
and this has resulted in a merger ratio of 104% of DPF’s NTA / 109% of PFI’s NTA.
5. In order for the Proposed Merger to proceed, PFI and DPF must each obtain shareholder
approval by way of a special resolution passed by 75% or more of each group of shareholders
entitled to vote and voting on the matter.
6. The Proposed Merger includes changes to PFI’s base management fee payable under its
management contract reflecting the increased size of the merged property fund. Pursuant to
Listing Rule 9.2.1 of the NZX Main Board (the NZSX Listing Rules), the changes to PFI’s
Management Agreement require approval by way of an ordinary resolution of PFI’s shareholders
(Shareholders) entitled to vote and voting on the matter. Any PFI shareholders associated with
PFI’s Manager may not vote on this resolution.
7. The Independent Directors of PFI have requested that PricewaterhouseCoopers (PwC) prepare an
independent appraisal report (the Report) assessing whether the proposed changes to PFI’s
Management Agreement are “fair” to the Shareholders not associated with DPF’s Manager.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001
Requirements Under the NZSX Listing Rules
8. Under rule 9.2.1 of the NZSX Listing Rules PFI shall not enter into a Material Transaction if a
Related Party is, or is likely to become a direct or indirect party to the Material Transaction,
unless that transaction is approved at a meeting of Shareholders by an Ordinary Resolution.
9. The proposed changes to PFI’s Management Agreement constitute a Material Transaction with a
Related Party, as defined by the NZSX Listing Rules, because the gross cost of the management
fee exceeds 1% of PFI’s Average Market Capitalisation calculated over the 20 trading day period
prior to the announcement of the Proposed Merger, and because PFI’s Manager is a Related Party
for the purposes of the NZSX Listing Rules.
10. To be approved pursuant to an Ordinary Resolution more than 50% of Shareholders voting and
entitled to vote must vote in favour of the proposed changes to PFI’s Management Agreement.
No Shareholder associated with the Related Party (i.e. PFI’s Manager) may vote in favour of the
Ordinary Resolution.
11. Under NZSX Listing Rule 9.2.5 the Notice of Meeting to approve the Material Transaction must
be accompanied by an Independent Appraisal Report confirming whether or not the terms and
conditions of the Material Transaction are fair to the Shareholders not associated with PFI’s
Manager (the Non-Associated Shareholders).
12. NZSX Listing Rule 1.7 contains general provisions relating to the preparation of appraisal reports
and the NZX’s approval of the appraiser. The following matters are relevant:
 Our Report must be addressed to the Independent Directors of the Issuer, being those
directors of PFI not associated with PFI’s Manager;
 Our Report is to be expressed as being for the benefit of the Shareholders in PFI, other than
those associated with PFI’s Manager;
 We are required to state whether or not, in our opinion, the consideration and terms and
conditions of the Material Transaction are “fair” to PFI’s Shareholders (other than the
Related Parties);
 We are required to state whether, in our opinion, the information to be provided by PFI to its
Shareholders is sufficient to enable them to understand all relevant factors and make an
informed decision in respect of the Material Transaction;
 We are required to state whether we have obtained all information which we believe is
desirable for the purposes of preparing our Report, including all relevant information which
is or should have been known to any director and made available to directors; and
 We are required to state any material assumptions on which our opinion is based and any
terms of reference which have materially restricted the scope of our Report.
13. The appointment of PwC as independent appraiser to assess the fairness of the proposed changes
to PFI’s Management Agreement was approved by NZX Regulation on 20 March 2013.

20 May 2013
Purpose of Report
14. The purpose of the Report is to present our assessment of whether the proposed changes to PFI’s
Management Agreement are fair to PFI’s Non-Associated Shareholders and in doing so, assist
them in forming their own opinion as to whether or not they should approve the resolution
required to give effect to the proposed changes to PFI’s Management Agreement.
15. We note that each Shareholder’s circumstances and investment objectives will be unique. It is
therefore not possible to prescribe or advise what action an individual Shareholder should take in
response to the proposed changes to the Management Agreement. Our advice will be necessarily
general in nature and is intended to assist each Shareholder to form their own opinion as to what
action they should take given their specific circumstances.
Approach to Assessing the Fairness of the Proposed Changes to PFI’s Management

Agreement
16. There is no statutory definition of “fair” under New Zealand law or in the NZSX Listing Rules.
Guidance Note Number 10, issued by the New Zealand Institute of Chartered Accountants states:
“the expression of an opinion as to fairness will generally involve an assessment as to

whether a transaction or proposal is just, impartial and equitable.”
17. The above definition provides only limited guidance, and therefore we also consider Policy
Statement 75 and Practice Note 43 issued by the Australian Securities and Investment
Commission (ASIC) relating to independent expert reports. The Policy Statement and Practice
Note prescribe standards of best practice for the preparation of expert reports. Furthermore,
ASIC Policy Statement 75 contains a definition of “fair” in the context of a takeover. It defines an
offer as “fair” if the value of the offer consideration is equal to, or greater than, the value of the
securities that are the subject of the offer.
18. In assessing the fairness of the proposed Management Agreement changes, we have considered:
 the level of PFI’s new management fee compared to the level of management fees paid by
externally managed NZSX LPVs; and
 the total management expenses paid by externally and internally managed LPVs.
19. As the proposed Management Agreement changes will only proceed if the Proposed Merger is
approved we have also considered the benefits and costs which may accrue to PFI’s Non-
Associated Shareholders as a result of the Proposed Merger.
20. Our principal findings and our opinion on the fairness of the proposed changes in PFI’s
Management Agreement are summarised in Section 2. This summary should be read in
conjunction with the balance of our Report.
Declarations, Qualifications, Disclaimer and Restrictions
21. This Report should be read in conjunction with the statements and declarations set out in
Appendix A regarding our independence, qualifications, restrictions on the use of this Report,
reliance on information, general disclaimer, limitation of liability and our indemnity.
Independence
22. We confirm that PwC possesses the necessary independence to carry out this role for the
independent directors of PFI. We are not aware of any conflicts of interest that would prejudice
our ability to provide an objective and independent opinion on the proposed changes to PFI’s
Management Agreement.

20 May 2013
23. Our firm has not undertaken any work for PFI, PFI’s Manager, DPF or DPF’s Manager within the
last three years. PwC has not had any role in the formulation of the proposed changes to the
Management Agreement or the Proposed Merger.
Note
24. All monetary amounts herein are expressed in New Zealand currency (NZD) and are stated
exclusive of Goods and Services Tax (GST), unless indicated to the contrary. Certain numbers
included in the tables have been rounded and therefore do not add precisely. Generally,
references to “year” should be taken as referring to PFI’s financial years ending on 31 December.
For example, references to the “2012 year” refer to the financial year ended 31 December 2012.
25. Information sources used in preparing this report are listed at Appendix B.
Yours faithfully
PricewaterhouseCoopers
David Bridgman Eric Lucas

Partner Partner

20 May 2013
1. Executive Summary
26. This Executive Summary is a summary only. It should be read in conjunction with the balance of
our Report, as contained in Sections 2 - 5.
27. Given the proposed changes to PFI’s base management fee comprise an integral part of the
Proposed Merger between PFI and DPF and will not occur unless the Proposed Merger is
approved, we have evaluated the proposed changes in the context of the consequences that the
Proposed Merger will have for PFI’s shareholders, as well as considering the relativity of the
proposed management fee against the management fee structures of other externally managed
LPVs and the total management expense ratios of all LPVs.
28. The Proposed Merger, which includes the proposed changes to PFI’s base management fee
structure, is expected to:
 more than double the size of PFI’s Total Assets from approximately $401m as at 31 March
2013 to $812m through the inclusion of DPF’s Total Assets. The number of properties in its
portfolio will increase from 50 to 83 and the number of tenants increases from 84 to 137;
 result in greater diversification of income through a broader spread of individual tenants and
properties and a smoother and extended lease expiry profile;
 increase the liquidity of PFI shares and improve access to equity and debt capital due to the
increased size of PFI and likely increase in institutional investor interest; and
 result in an increase in forecast distributable earnings for PFI shareholders for FY13 from an
estimated 6.6 cents per share absent the Proposed Merger to an estimated 7.04 cents per
share in FY13 (assuming a 1 July merger date). Assuming the merger had taken effect on
31 December 2012 FY13 distributable earnings are estimated to increase to 7.31 cents per
share. We note that the majority of the increase results from closing out DPF’s interest rate
swaps and replacing them with lower cost debt.
29. The proposed changes to PFI’s base management fee structure result in a higher management fee
than would apply under PFI’s existing base management fee, both in absolute monetary terms
and when measured as a percentage of assets under management. However, the new fee
structure represents a blending of the existing PFI and DPF management fee structures such that
PFI’s Manager will receive approximately the same level of management fees that is payable by
PFI and DPF at present, whilst they are managed separately.
30. The proposed annual base management fee (net of recoverable property management fee income
of $175,000) of $4.62m (assuming average total tangible assets of $814m post merger) will be
approximately $1.3m higher than would be notionally payable under PFI’s existing management
contract if that was simply applied to the additional assets resulting from the Proposed Merger.
This equates to 0.57% of total assets under management, compared to 0.40% under PFI’s existing
management contract (when applied to the increased asset base). This ranks PFI’s base
management fee when measured as a percentage of total assets under management as the second
highest amongst the five LPVs with external management, although all the LPVs with lower
percentage fees are considerably larger.
Executive Summary 8
31. Direct comparison of externally managed LPVs base management fees is difficult because the
level of services provided in return for the base management fee varies. PFI’s base management
fee covers the provision of property management services and PFI’s Manager is not able to charge
additional fees for leasing, rent reviews and project management. Our analysis of the costs of
these additional services for other externally managed LPVs over the last five years suggests an
average annual cost of between 0.21% and 0.33% of average Total Assets (excluding intangible
assets, where applicable) typically incurred by other LPVs for the provision of these other
services. Taking this additional fee into account PFI’s proposed new management fees, whilst
higher than under the existing management fee structure, will be the lowest of the five externally
managed LPVs.
32. When compared to the total management expenses of all LPVs, PFI’s total MER (after allowing
for the increase in base management fee) increases by 0.03% to 0.70% which is lower than the
MERs of VHP, DNZ, NPT, Augusta, Argosy and PCT, but more than the MER’s of GMT and KIP,
both of which are considerably larger than PFI will be immediately post merger. Again, including
the average additional fees, PFI post merger will be the lowest.
33. The base management fee of 0.35% that will be payable on marginal growth in total assets is
lower than the other externally managed LPVs (except for PCT which also has a base fee of 0.35%
on marginal growth albeit at a much higher threshold of $1.5 billion). As a consequence, PFI’s
base management fee, when averaged across its total asset base, will progressively reduce as PFI’s
asset base grows over time post merger.
34. In our view the Proposed Merger and the consequent doubling in the size of PFI’s asset base
offers a number of benefits to PFI’s shareholders. To achieve the same $411m increase in size in
the absence of the Proposed Merger would be likely to cost PFI’s shareholders more than the
impact of the proposed increase in the base management fee as a result of transaction costs that
would be incurred as part of a capital raising which would be needed to fund a similar level of
growth.
35. In our opinion, the proposed changes to PFI’s Management Agreement are “fair” to the Non-
Associated Shareholders of PFI, because the benefits of the Proposed Merger more than offset the
increase in the base management fee and although the threshold has increased from $175m to
$775m the management fee on incremental growth remains at 0.35%.
36. In our opinion, the information to be provided by PFI to its Non-Associated Shareholders is
sufficient to enable them to understand all relevant factors and make an informed decision in
respect of the proposed changes to PFI’s Management Agreement.
Executive Summary 9
2. Overview of PFI & DPF and Proposed Merger
Background
PFI
37. PFI was listed on the NZSX in 1994 as a property fund with a primary focus on industrial
property. PFI’s property portfolio has increased in size from $16.9m to approximately $400m1
through a combination of acquisitions and capital appreciation. In 1999 the original manager
was sold by interests associated with Morrison Holdings Limited and Willis Bond and Company
Limited to AMP Asset Management Limited. In January 2012, AMP sold the management
contract to a wholly owned subsidiary of DPF’s Manager. DPF’s Manager is partly owned by
interests who were associated with shareholders of the original manager of PFI. PFI has
approximately 4,800 shareholders.
DPF
38. DPF is an unlisted property fund which was established by interests associated with DPF’s
Manager in 2003. DPF’s property portfoil0 has increased from a single property valued at
approximately $10m to a portfolio of 33 properties with a value of approximately $414m2. It has
approximately 500 shareholders.
DPF (DPF’s Manager and associates) 7%

Direct Property
Management Management Fund Limited
Limited Agreement
100%
Property For
Management
PFIM Limited Agreement
Industry
Limited
Source: New Zealand Companies Office, PFI & DPF financial statements
1
This includes the value of a development at 15 Copsey Place "as if complete". The development is due to be completed in
October 2013. The estimated cost to complete is $1.1m and on completion a value uplift of $0.8m has been assumed.
2
This includes the value of a development at 124b Hewletts Road "as if complete". The development is due to be completed in
June 2013. The estimated cost to complete is $3.8m and on completion a value uplift of $2.1m has been assumed.
Overview of PFI & DPF and Proposed Merger 10
Property Portfolios
PFI
39. The type of properties and geographic distribution of PFI’s property portfolio by value are shown
in the charts below:
PFI investment portfolio asset class PFI investment portfolio geographic split
3% 6%
5%
97% 89%
Industrial Of f ice Auckland Wellington Christchurch

Source: PFI Source: PFI
40. The majority (97%) of PFI’s properties are industrial. The remaining 3% comprise retail and
office space. The portfolio is predominantly located in the Auckland region (89%).
DPF
41. The type of properties and geographic distribution of DPF’s property portfolio by value are shown
in the charts below:
DPF investment portfolio asset class DPF investment portfolio geographic split
5% 1%
16% 9%
17%
67%
85%
Industrial Of f ice Other Auckland Tauranga Wellington Hamilton

Source: DPF Source: DPF
42. The majority (67%) of DPF’s properties are industrial. The remaining 33% comprise office 17%
and other commercial properties 16%. The portfolio is predominantly located in the Auckland
region (85%).

Ownership and Share Trading History
PFI
43. As at 31 March 2013, PFI had approximately 4,800 Shareholders. PFI’s top 10 Shareholders
currently hold 78.3m shares or 35.5% of the Company. There are no individual shareholdings
greater than 5%.
44. The following graph illustrates PFI’s share price movements and trading volumes for the two
years ended 30 March 2013:
PFI Share Price and Volume (two years ended 31 March 2013)
1.40 1,000
900
1.30
800
700
1.20
Trading Volume (000s)

600
Share Price (NZ$)
1.10 500
400
1.00
300
200
0.90
100
0.80 -
Trading Volume Share Price

Source: Capital IQ
45. Over the 12 months to 31 March 2013 the Company’s share price fluctuated between a high of
$1.31 in March 2013 and a low of $1.13 in June 2012, with an average daily volume of
approximately 134,000 shares traded. The Volume Weighted Average Price (VWAP) for the 20
trading days prior to 31 March 2013 was $1.29 per share. This represents a 13.7% premium to
PFI’s NTA as at 31 December 2012 of $1.13 per share.

46. The graph below illustrates PFI’s Total Shareholder Return3 (TSR) compared with the NZX 50
Gross Index4 and the NZX Gross Property Index5 over the last two years:
PFI Performance Relative to Industry Performance (31 March 2011 base)

150
140
130
120
110
100
90
80
NZX Gross Property Index PFI NZX 50 Gross Index

Source: Capital IQ
47. In the two years to 31 March 2013 the return on the NZX 50 Gross Index was 28.6%, the return of
the NZX Gross Property Index was 38.9% and PFI’s TSR was 32.4%.
48. PFI is a listed Portfolio Investment Entity (PIE). It pays tax at 28% and attaches available
imputation credits to distributions. As a listed PIE the distributions are treated as excluded
income for tax purposes and no further tax is payable for New Zealand individual or trustee
shareholders. For the year ended 31 December 2012, PFI paid a cash dividend of 6.6 cents per
share. This is equivalent to a cash dividend yield of 5.06% based on PFI’s share price of $1.31 as at
31 March 2013.
3
Total Shareholder Return (TSR) is a measure of a company’s performance that includes changes in share price and dividends
paid.
4
The NZX 50 Gross Index comprises the 50 largest New Zealand listed stocks by market capitalisation, adjusted for dividends
paid and stock splits.
5
The NZX Gross Property Index comprises the performance of the NZX listed property sector, adjusted for dividends paid and
stock splits.
New Zealand LPV's relative performance (to 31 March 2013)
70%
61.0%
60% 58.2%
53.6%
Total Shareholder Return
50% 44.7%
41.9%
38.9%
40% 34.5% 35.1%
32.4% 32.6% 31.7%
28.4% 28.6%
30% 24.4% 26.0%
20.4% 19.0%
17.5% 18.1% 18.3%
20%
13.1%
10% 7.7%
0%
KIP GMT PCT ARG DNZ VHP PFI NPT AUG NZX Property IndexNZX50
2 year performance 1 year performance
Source: Capital IQ, NZX Company Research
DPF
49. As at 3 April 2013, DPF had approximately 500 shareholders. DPF’s top 10 Shareholders
currently hold 381,000 shares or 24.6% of DPF. This includes DPF’s Manager (1.8%) and
shareholders of DPF’s Manager (4.9%) who collectively own approximately 6.7% of DPF and are
the largest shareholder.
DPF Trading Price and Volume

152 14,000
150
12,000
148
10,000
146
Trading volume
Share price ($)
144 8,000
142 6,000
140
4,000
138
2,000
136
134 -
Trading Volume Price

Source: Computershare
50. We have been advised that DPF’s shares typically trade at or close to NTA. In the two years to
31 March 2013 the total volume of DPF shares traded was 157,349, representing a total value of
$22.9m. In the last 12 months, 67,125 shares traded at a VWAP of $145 per share.
51. DPF is an unlisted “multi-rate” Portfolio Investment Entity (PIE) and as such it pays tax based on
the tax rates of its shareholders. The distributions to shareholders are treated as excluded
income for tax purposes and no further tax is payable for New Zealand taxpayers.

52. For the year ended 31 March 2012, DPF’s shareholders received a minimum cash dividend of
$9.08 per share, depending on the individual shareholder’s Prescribed Investor Rate (PIR) they
may have received up to $10.70 per share. The minimum cash dividend is equivalent to a
dividend yield of 6.01% based on an assumed DPF share price of $151 (NTA of $145 x 104%). The
forecast minimum cash dividend for the year ending 31 December 2013 assuming the Proposed
Merger does not proceed is $8.66 per share.
Governance
53. The PFI Board of Directors comprises three independent directors, Messrs Peter Masfen
(Chairman), Humphry Rollerston and Anthony Beverley, and a representative of PFI’s Manager,
Mr. Greg Reidy. PFI’s Board can comprise up to eight members and at least two or a third of its
directors (whichever is the greater), must be Independent Directors.
54. The responsibilities of the Board include:
 Protecting and enhancing the value of assets of the Company for the benefit of Shareholders;
 Statutory responsibility for the affairs and activities of the Company;
 Ensuring effective disclosure policies and procedures are fulfilled to maintain a fully
informed market; and
 Delegating responsibility to the manager to implement and deliver the adopted corporate
strategies and maintaining oversight of the manager’s performance.
55. The existing DPF Board of Directors comprises two non-executive directors, Messrs Arthur
Young (Chairman) and John Waller, and two representatives of DPF’s Manager, Messrs Greg
Reidy and Sam Bufton.
56. Following the Proposed Merger, PFI’s Board will comprise six directors, Messrs Peter Masfen
(Chairman), Humphry Rollerston, Anthony Beverley, and John Waller, all who are independent,
Mr. Arthur Young (a non-executive director) and Mr. Greg Reidy as representative of PFI’s
Manager.

57. PFI is managed by PFIM Limited, a wholly owned subsidiary of DPF’s Manager, under the terms
of the Management Agreement originally dated 8 April 1994 and subsequent amendments dated
19 October 1994, 30 April 1999 and 30 September 2001. The manager’s responsibilities include:
 making recommendations to the Board and managing property acquisitions and

divestments;
 managing relationships between PFI and agents, lessees, vendors, valuers, investors, the
NZX, professional advisors and other relevant parties;
 arranging funding for PFI and managing the Company’s financial affairs;
 arranging for valuations of PFI’s properties to be completed at regular intervals;
 ensuring collection of rents and compliance by lessees of PFI’s properties;
 ensuring payment of permissible outgoings and recoveries (where possible) from lessees;
 managing negotiations of rent reviews, variations of leases and lease renewals;
 managing any development projects and maintenance on the properties;
 ensuring compliance by PFI with all relevant rules and regulations; and
 general administrative and reporting duties.
58. Fees payable to the manager are set out in the Deed of Variation of Management Agreement,
dated 30 April 1999. The manager’s remuneration comprises a base management fee and a
performance fee. The base fee is currently calculated as 0.7% per annum of Total Assets of PFI up
to $175m and 0.35% per annum of Total Assets to the extent they exceed $175m. The base
management fee is calculated monthly and paid in arrears.
59. The performance fee is calculated based on returns accruing to PFI’s Shareholders each quarter.
PFI’s Manager is entitled to be paid 10% of the amount by which the TSR exceeds 10% per annum
up to a maximum of 15% per annum. Where the TSR exceeds 15% per annum, the excess is
carried forward to subsequent quarters for a maximum period of eight quarters. If the TSR is less
than 10% per annum for a quarter, the deficit is also carried forward (for a maximum of eight
quarters) and taken into account in calculating the entitlement to performance fees in subsequent
quarters.
60. The term of the Management Agreement is open ended. Providing the Manager is performing its
obligations under the Management Agreement, it will continue indefinitely.
61. PFI’s Manager can give six months notice if it wishes to terminate the Management Agreement.
PFI may only terminate the Management Agreement if PFI’s Manager fails to perform its duties
or becomes insolvent.
62. There is no change in control clause in PFI’s Management Agreement so PFI’s Manager is
relatively entrenched. Any party wishing to take over PFI would need to negotiate the purchase
of PFI’s Management Agreement directly with PFI’s Manager if it wished to change or remove the
manager.

Comparison of PFI’s and DPF’s Management Agreements
63. We set out below a comparison of PFI and DPF’s existing management agreements:
Direct Property Fund Property For Industry

Base Fee (paid monthly)
Tier 1 0.75% up to $250m 0.7% up to $175m
Tier 2 0.55% up to $500m 0.35% above $175m
Tier 3 0.45% above $500m n/a
Based on Average Investment Property Average Total Assets
Current effective management fee
0.68% 0.50%
(% of total assets at 31 March 2013)
Performance Fee (paid quarterly)

10% of TSR over threshold (2.5% per
Rate n/a
quarter)
Threshold n/a 10% TSR

5% of annualised outperformance over
Cap n/a
threshold (i.e. 3.75% TSR per quarter)
TSR shortfalls and excesses carried
n/a 2 years
forward
Source: PFI & DPF Financial Statements, Management Agreements
Note: n/a = not applicable
Proposed Merger
64. Under the Proposed Merger shareholders in DPF will have their existing shares cancelled and in
consideration for the cancellation they will receive approximately 123.22 new shares in PFI for
every DPF share they hold. The exchange ratio6 of 104% of DPF’s NTA / 109% of PFI’s NTA
reflects a premium to PFI’s and DPF’s respective NTAs as at 28 February 2013. The agreed
exchange ratio has been based on negotiations between the Boards of PFI and DPF.
65. Based on this exchange ratio immediately following the Proposed Merger DPF’s shareholders will
collectively hold 46.4% of PFI’s expanded share capital.
66. Following the merger, PFI’s Manager will manage the expanded property portfolio of the merged
enterprise and the Proposed Merger will include changes to PFI’s base management fee, which
essentially reflects an amalgamation of the existing base management fee structures of PFI and
DPF which will then apply to the expanded property portfolio. As noted previously, under the
NZSX Listing Rules the proposed changes to the base management fee must be approved by
Shareholders.
67. A comparison of PFI’s and DPF’s existing fee structures and the proposed new fee structure for
PFI post-merger is set out in the following section of the Report.
6
Refer to Section 3 of the Notices of Meeting and Information Memorandum for an explanation of the exchange ratio.
Property Metrics
68. The table below provides a comparative summary of key metrics for PFI and DPF pre and post
the Proposed Merger:
As at 31 Decem ber 2013 Direct Property Fund Property For Industry PFI post-merger
1
Portfolio valuation $420m $404m $824m
Total Assets $421m $405m $826m 2
Net tangible assets (NTA) $257.6m $235.7m $486.8m
Loan to value ratio (LVR) (estimate) 41.2% 33.0% 38.6%
Gross rental income3 $32.1m $31.6m $63.7m
Management fee3 $2.8m $2.0m $4.8m

3 4
Distributable earnings (cents per share) 7.03 6.60 7.31
As at 31 March 2013
Properties 33 50 83
Tenants 55 84 137
Weighted Average Lease Term (WALT) 6.4 years 4.8 years 5.6 years
Contract yield 7.65% 8.21% 7.93%
Historical dividend yield 6.01% 5.06% n/a
Source: PFI & DPF Financial Statements, PFI merged entity model
Note 1: Includes capitalised lease incentives of $4.5m for DPF and $7.4m for PFI
Note 2: PFI merged entity assets exclude goodw ill of $9.8m
Note 3: Pro Forma FY13 assuming merger date of 31 December 2012
Note 4: Number of shares used in the calculation reflects the exchange ratio of 123.22 (rounded)
69. Based on the financial positions of PFI and DPF as at 31 March 2013, following the Proposed
Merger, PFI will have estimated Total Tangible Assets of $814m and Net Tangible Assets of
$487m or $1.17 per share and an estimated market capitalisation assuming its shares trade at a
9% premium to NTA of $509.5m.
70. If the Proposed Merger proceeds on 1 July 2013, the forecast dividend for the year ended
31 December 2013 is projected to increase from 6.6 cents per share to 7.04 cents per share. We
note that 0.27 cents per share of the 0.44 cents per share increase results from closing out DPF’s
interest rate swaps and replacing them with lower cost debt. The cost of closing out these swaps
is approximately $9.4m and this cost is reflected by a higher level of debt post merger.
71. Assuming the merger had taken effect on 31 December 2012, FY13 distributable earnings are
estimated to increase to 7.31 cents per share.

3. The Proposed Changes to the PFI
Background
72. As part of the Proposed Merger, shareholders of PFI not associated with the Related Party, are
being asked to approve certain changes to its existing Management Agreement with PFI’s
Manager. The proposed changes are summaries below.
Changes to the Management Agreement
Base Fee
73. At present, PFI’s base management fee is calculated at a rate of 0.7% per annum for the first
$175m of Total Assets of the Company and 0.35% per annum on Total Assets exceeding $175m.
The fee is calculated monthly and paid one month in arrears.
74. It is proposed that the base fee be amended to a three tiered fee structure as follows:
 0.725% per annum on Total Tangible Assets up to $425m;
 0.45% per annum on Total Tangible Assets between $425m and $775m; and
 0.35% per annum on Total Tangible Assets exceeding $775m.
75. The base management fee will continue to be calculated monthly and paid one month in arrears.
Performance Fee
76. No change is proposed to PFI’s existing performance fee.
Other Changes
77. In addition to the three tiered fee structure, the basis of the management fee calculation has been
changed from Total Assets to Total Tangible Assets. This means that the management fee will not
be paid on the $9.8m of goodwill which will be created by the Proposed Merger as DPF is
effectively being acquired by PFI at a 4% premium to its NTA.
78. The Management Agreement has also been amended to reflect changes to:
 PFI’s gearing policy;
 the level of cover for PFI’s Manager’s required professional indemnity insurance which has
increased from $2m to $5m;
 current accounting terminology;
 redundant provisions and schedules; and
 statutory references to take account of legislative changes.
The Proposed Changes to the PFI Management Agreement 19

79. Under PFI’s existing Management Agreement PFI’s Manager must ensure that PFI’s total
liabilities do not exceed 35% of Total Tangible Assets without the prior written consent of PFI’s
Board. Under the proposed changes to PFI’s Management Agreement the measure of gearing has
been amended to a loan to value ratio (LVR) limit of 40% which cannot be exceeded without the
prior written consent of the Board. The LVR is measured as total interest bearing debt divided by
the most recent valuation of PFI’s property portfolio and is consistent with the gearing measure
used in PFI’s banking covenants. The maximum LVR permitted by the banking covenants is
50%. Following the Merger PFI’s LVR is expected to increase from 33% to 38.6%.
80. Apart from the changes to the structure of the base management fee calculation, the other
changes to the Management Agreement referred to above are largely procedural and in our
opinion do not impact on our assessment of whether the proposed changes to the management
fee under the Management Agreement are fair.
Conditions
81. The Proposed Merger is conditional on approval by 75% of shareholders of PFI and DPF entitled
to vote and voting. In addition, under the NZSX Listing Rules, PFI’s Non Associated
Shareholders must also approve the proposed changes to the Management Agreement by way of
an Ordinary Resolution. This only requires a majority of 50% rather than the 75% majority that is
required to approve the Proposed Merger.
The Proposed Changes to the PFI Management Agreement 20

4. Assessment of the Proposed Changes to the
PFI Management Agreement
Introduction
82. PFI is seeking Shareholder approval for the proposed changes to the Management Agreement as
described in Section 3. Under the NZSX Listing Rules the proposed changes to the Management
Agreement are considered a Material Transaction with a Related Party (PFI’s Manager) and
therefore an Independent Appraisal Report assessing whether the proposed changes to the
Management Agreement are fair to the Non Associated Shareholders must be prepared.
83. To assess the fairness of the proposed changes to the Management Agreement, having regard for
the interests of the Non Associated Shareholders, we have considered:
 the level of PFI’s new management fee compared to the level of management fees paid by
externally managed NZSX LPVs;
 the total management expenses paid by externally and internally managed LPVs; and
 other benefits and costs that may accrue to the Non Associated Shareholders of PFI as a
result of the Proposed Merger.
Management Fee Structures for LPVs
84. Of the nine LPVs on the NZSX, five are externally managed and four have internal management.
Externally managed LPVs pay a management fee based on the value of either total assets or
investment properties under management to a manager which is responsible for providing fund
management services to the LPV. In contrast, in an internally managed LPV the management
services are provided by staff employed directly by the LPV.
85. The management function for an LPV can be split into two broad categories of services:
 fund management services – which involve management of the vehicle itself (e.g. financial
reporting, debt management, strategy, etc.). For externally managed vehicles, fees for these
services are typically charged as a base fee calculated as a percentage of assets under
management; and
 property management services – which involve day to day management of the tenants,
collecting rents, leasing of space, conducting rent reviews, project management of remedial
or development works and property development. For externally managed LPVs these
services are typically charged on a basis that is in addition to the fund management fee.
86. In addition to the base fund management fee managers of all of the externally managed LPVs are
also entitled to be paid performance fees which are an attempt to better align the interests of the
manager with the interests of the LPV’s shareholders. The performance fees are typically based
on exceeding a TSR threshold with the manager sharing a portion of any increase exceeding the
threshold. This helps balance the incentive for the manager to increase the asset base upon which
the base management fee is paid as the performance fee is solely reliant on TSR performance.
87. We note that it is difficult to directly compare LPV base fund management fees in isolation as
different management agreements require different levels of service to be provided. In the case of
PFI, in return for its base fund management fee PFI’s Manager is required to also provide
property management services as well. However, we note that generally PFI’s industrial
properties would require less property management services than larger multi-tenanted office
and retail properties.
Assessment of the Proposed Changes to the PFI Management Agreement 21

88. We set out in the table below a summary of the current fund management fee structures for the
five externally managed LPVs. We have also included PFI’s proposed fee structure under the
Proposed Merger.
Goodman Kiwi Income Precinct Vital Healthcare Property For Industry PFI Post-merger
GMT KIP PCT VHP PFI PFI
Base Fee
0.55% up to
0.725% up to $425m,
0.5% up to 500m, $1,000m, 0.45% 0.7% up to $175m,
Rate 0.55% 0.75% 0.45% up to $775m,
0.4% thereafter up to $1,500, 0.35% thereafter
0.35% thereafter
0.35% thereafter
Average Total
Average Total Average Total Average Total Average Total
Based on Assets, less cash Investment Property
Assets Assets Assets Assets
& debtors
Performance Fee
10% of average
10% of unit holder 10% of unit holder 10% of
annual 10% of shareholder 10% of shareholder
Rate return over return over shareholder return
increase in TA return over threshold return over threshold
threshold threshold over threshold
over 3 years
Quarterly gross Quarterly gross

Threshold return from NZ LPV 10% TSR return from NZ LPV n/a 10% TSR 10% TSR
Index (excl GMT) Index (excl PCT)
5% of annualised 0.15% of Average 5% of annualised 1% of Average 5% of annualised 5% of annualised

Cap
outperformance Total Assets outperformance Total Assets outperformance outperformance
TSR shortfalls &

Indefinite Max 2 years Max 2 years Indefinite Max 2 years Max 2 years
excesses carried forward
Source: NZ LPVs Financial Statements
Note 1: References to Average Total Assets exclude intangible assets
Base Fee
89. Externally managed LPVs charge fund management base fees calculated either on average total
assets or in the case of Precinct Properties Limited (PCT) the value of average investment
properties. Vital Healthcare Property Trust (VHP) has the highest annual base fund management
fee at 0.75%. Kiwi Income Property Trust (KIP) has an annual base fund management fee of
0.55%. The remaining three externally managed LPVs have a tiered base fee structure. Goodman
Property Trust (GMT) charges 0.5% up to total assets of $500m and 0.4% thereafter, PCT
charges 0.55% up to Investment Properties of $1b, 0.45% between $1b and $1.5b and 0.35%
thereafter. PFI currently charges 0.7% up to Total Assets of $175m and 0.35% thereafter.
90. Under the new fee structure for PFI, a three-tier structure levied on Average Total Tangible
Assets has been proposed comprising 0.725% up to $425m, 0.45% between $425m and $775m,
and 0.35% thereafter.
91. Whilst the marginal fee remains at 0.35%, the threshold that it applies from increases from
$175m to $775m.
92. The new fee structure represents a blending of the existing PFI and DPF management fee
structures such that PFI’s Manager will receive approximately the same level of management fees
that is payable by PFI and DPF at present, whilst they are managed separately. We do note
however that on incremental growth the fee is currently 0.35% vs 0.45% which is currently paid
by DPF for incremental growth on investment properties above $500m.
93. PFI’s average base management fee over the last three years was 0.50%. Under the proposed
management fee structure and the expanded asset base post merger PFI’s base management fee
increases to 0.57%. Our analysis is summarised in the chart below:

Base management fees of New Zealand externally managed LPVs (percentage of average total assets)
0.9%
0.8%
0.7%
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
VHP KIP PFI PCT GMT PFI post-merger
2012 2011 2010 Average
Source: Capital IQ, NZ LPVs financial statements, PFI merged entity model
Note: Precinct restructured its fee structure in 2011 and added a performace fee component which was paid in 2012 at 0.24% of average
assets. This has been excluded in the data shown above.
94. We have also compared the proposed base fee structure with PFI’s existing base fee and the base
fee structures of the four other externally managed LPVs by calculating the base management fee
payable on an asset base of $814m under the various LPV base management fee structures and
the proposed PFI management fee structure.
Base management fees of New Zealand externally managed LPVs applied to PFI's post merger average assets
7.0 0.80%
0.70%
6.0
0.60%
5.0
Management fee (NZ$m)
0.50%
4.0
0.40%
3.0
0.30%
2.0
0.20%
1.0
0.10%
0.00%
PFI Existing PFI post-merger PCT GMT KIP VHP
Management Fee Effective Rate (RHS)

Source: NZ LPVs financial statements, PwC analysis, Management Agreements

95. The proposed fee structure results in an estimated fee payable to PFI’s Manager that is
approximately $1.3m per annum higher than the amount that would be payable under PFI’s
existing fee structure for the post merger Average Total Tangible Assets of $814m and is only
lower than the management fees payable under VHP’s base fee structure. However, PFI’s
marginal base fee of 0.35% per annum is lower than that of all other externally managed LPVs
with the exception of PCT which also has a marginal fee of 0.35% albeit on a higher threshold of
$1.5 billion. Therefore as PFI’s post-merger asset base grows the total base fee as a percentage of
Total Tangible Assets will decline as illustrated in the chart below:
Base fee structure of New Zealand externally managed LPVs

16
PFI post merger average
total assets ($814m)
14
12
Management fee (NZ$m)
10
-
- 250 500 750 1,000 1,250 1,500 1,750 2,000
Total assets (NZ$m)

PFI PFI post-merger PCT GMT KIP VHP
Source: NZ LPVs financial statements, PwC analysis, Management Agreements
96. If PFI’s Total Tangible Assets increased to say, $1.25 billion its base management fee under the
proposed management fee structure would be lower than VHP, KIP and PCT, excluding any
adjustments for additional fees.
Performance Fee
97. All the externally managed LPVs have performance fees. With the exception of VHP they are
based on either absolute shareholder returns or shareholder returns relative to a peer group of
LPVs.
98. For KIP a performance fee is calculated as 10% of the total return above 10% but capped at 0.15%
of average gross assets in any one period. For PFI the performance fee is calculated as 10% of
total return between 10% and 15%. In both cases any under or over performance is carried
forward for a period of up to two years.
99. For GMT and PCT, a performance fee is payable based on 10% of any outperformance of an LPV
index (excluding the LPV which is being measured against the index). The fee is capped at 5% of
outperformance with any under or over performance carried forward for two years in the case of
PCT, and indefinitely in the case of GMT.

100. VHP’s performance fee is based on a 10% share of the average annual increase in gross assets
over a three year period with the performance fee payable in any one year capped at 1% of gross
assets. Any under or over performance is carried forward indefinitely.
Additional Fees
101. As discussed above, in some cases external LPV managers provide other services for which they
are able to charge fees over and above the base fund management fee, for example:
 property and facilities management fees (some or all of which can be recovered from
tenants);
 leasing fees or lease renewal fees;
 rent review fees;
 acquisition/disposal fees;
 project management fees; and
 development fees.
102. We set out in the table below an analysis of the average additional fees charged by KIP, GMT and
PCT over the last five years. VHP does not appear to have charged any additional fees over this
period. PFI does not charge additional fees over and above its base and performance fees and
where it is able to on charge for property management services it offsets these recoveries against
the management fee charged to PFI ($192,000 in FY12):
$millions KIP GMT PCT
Property management services net cost to LPV 6.94 0.18 0.31

Development fees - 1.94 0.35
Leasing, acquisition and disposal - 2.34 2.14
Total additional fees 6.94 4.46 2.80
Additional fees % average assets 0.33% 0.27% 0.21%
Source: LPVs & LPV's managers financial statements, PwC analysis
103. Comparison of these additional fees between LPVs is difficult. Not all LPV managers provide the
same services and the level of fees charged for particular services are not always disclosed in
sufficient detail. In addition, a portion of the additional fees may be recoverable from tenants. In
a number of cases the fees charged by the LPV manager may be for services that are provided by
third parties in other LPV instances (e.g. property management services or leasing services). If
fees charged by an LPV manager for some of the additional services are at a higher than market
rate the “excess” should be included in any analysis of total expenses but there is insufficient
detail to make an accurate comparison.
104. We have analysed additional management fees as a percentage of average total tangible assets for
the five externally managed LPVs. For the last five years the average fee was 0.27% with the
highest fee of 0.42% and the lowest fee 0.12%.

LPVs Total Management Expenses Ratio
105. Whether an LPV is managed externally or internally, a key issue for investors is the total
management costs and whether the interests of management are aligned with the interests of
investors. We have calculated the FY2012 total management expense ratio (MER) (management
fees, where applicable, plus other operating expenses7, divided by average total assets) for
externally and internally managed LPVs. For externally managed LPVs we have added the
potential maximum performance fee although we note that in FY2012 only PCT actually paid a
performance fee. The results of our analysis are set out in the graph below:
Total expenses and maximum performance fee for New Zealand LPVs (percentage of Average Total Assets)
2.5%
2.0%
Average assets (%)
1.00%
1.5%
0.39%
1.0%
0.38% 0.31%
0.38% 0.15%
1.15% 1.10% 1.10%
0.5% 0.88% 0.92%
0.67% 0.70% 0.66% 0.74%
0.57%
0.0%
VHP PCT NPT AUG PFI FY13 PFI post- GMT DNZ KIP ARG
(projected) merger
Total expenses Maximum performance fee Average MER

Source: Capital IQ, NZ LPV financial statements, PFI merged entity model
Note 1: PFI post merger values are based on forecast expenses under the proposed management agreement including merger synergies
Note 2: The analysis excludes fees related to internalisation and includes capitalised management fees where applicable
106. Excluding potential performance fees, LPV’s MERs range from a maximum of 1.15% for VHP to
0.57% for GMT with an average of 0.87%. PFI’s MER pre-merger is 0.67% and post merger the
new fee structure increases to 0.70%, which is still below the average MER. Whilst the
management fee component is projected to increase from 0.45% to 0.57%, the other expenses
component is projected to decline from 0.23% to 0.14%.
107. Whilst PFI’s maximum performance fee post-merger is 0.31%, we note that the average
performance fee paid by PFI between 2000 and 2012 was 0.18% (58% of the maximum
performance fee).
LPVs EBIT to Average Total Assets
108. Given the inherent issues with comparing the management fees and MER’s of LPVs we have also
compared the Earnings Before Interest and Tax (EBIT) to Average Total Asset ratios for LPVs
because this measure should capture the impact of the various different fee structures and the
costs of additional services for the LPVs:
7
Other operating expenses include expenses such as director’s fees and audit fees but excludes bad and doubtful debts, non-
recoverable property cost and fees relating to internalisation of management where applicable.

EBIT of New Zealand LPVs (percentage of average total assets)
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
VHP PCT PFI KIP GMT ARG PCT NPT AUG PFI post-
merger
2012 2011 2010 Average
Note: PFI post merger is based on projections assuming the merger occurs on 31 December 2012
109. We note that the average LPV EBIT to Average Total Assets ratio for the last three years was
6.49% and for PFI the average was 7.49% over the same period. Based on annualising PFI’s post-
merger EBIT, its EBIT to Average Total Assets ratio is 7.22% which is still higher than the LPV
average for the last three years. Whilst this measure is not perfect as it does not take into account
revaluations and is impacted by the mix of property assets it nonetheless reflects the pre-funding
yield of the respective LPV’s portfolios after allowing for all property management, management
fees and other operating expenses.
Other Consequences of the Proposed Merger
110. Given the proposed changes to PFI’s base management fee comprise an integral part of the
Proposed Merger between PFI and DPF and will not occur unless the Proposed Merger is
approved, we have evaluated the proposed changes in the context of the impact of the Proposed
Merger on PFI which we summarise below.
Distributable earnings
111. The Information Memorandum sets out an analysis of the Proposed Merger on PFI’s FY13
distributable earnings assuming the Proposed Merger occurs on 1 July 2013. We have also
considered the impact of the Proposed Merger on distributable earnings assuming a merger date
of 31 December 2012 to illustrate a full year impact on distributable earnings. This analysis is
summarised in the table below:
Distributable earnings per share PFI standalone PFI post-merger Difference
Merger date 1 July 2013 (cents) 6.60 7.04 6.7%
Merger date 31 December 2012 (cents) 6.60 7.31 10.8%
Deloitte Normalised 6.88 6.90 0.2%
Source: Information Memorandum, Deloitte Report, PwC Analysis
112. The Proposed Merger is expected to result in a 6.7% increase in distributable earnings for PFI
shareholders in FY13 assuming a merger date of 1 July, albeit the majority of the increase is due
to the closing out of DPF’s interest rate swaps. On a full year basis distributable earnings could
be expected to increase by approximately 11%.

113. Deloitte has prepared a report on the merits and fairness of the Proposed Merger and have
undertaken an analysis where they “normalise” distributable earnings for a range of factors
(occupancy rates, current vs market rentals, gearing, hedging, the DPF swaps buy-out, abnormal
rental provisions and timing of tax payments). The Deloitte analysis shows normalised
distributable earnings for PFI’s shareholders increases by 0.2% as a result of the Proposed
Merger.
Size
114. Following the proposed merger PFI will rank as New Zealand’s fifth largest LPV by Total Assets
and NTA, as illustrated in the graph below:
Net assets and total assets for New Zealand Listed Property Funds
2,500
2,000
1,500
1,000
500
-
KIP GMT PCT ARG PFI post- DNZ VHP PFI NPT AUG
merger
Total assets Net assets

115. Assuming that PFI post merger trades at a price to NTA ratio of between 1.05x and 1.1x, PFI
would move from 42nd in the NZX 50 index to approximately 29th. This increased size and higher
index ranking should result in an increase in institutional investor interest in the Company,
greater coverage by research analysts and improved access to debt and equity capital.
Liquidity
116. There is a correlation between liquidity (measured as total volume of shares traded in the last 12
months divided by average number of shares on issue) and size of LPVs, as shown in the graph
below:

New Zealand LPVs size and liquidity
2,500 40%
35%
2,000
30%
Liquidity (%)
NZ$millions
1,500 25%
20%
1,000 15%
10%
500
5%
- 0%
KIP GMT PCT ARG DNZ VHP PFI NPT AUG
Total assets ($m) Liquidity (RHS)

Source: Capital IQ, NZX Company Research
Note: Following the internalisation of Argosy's management agreement, MFL Mutual Fund Ltd's shareholding dropped from c.20% to
c.13% constituting c. 25.9m shares which is reflected in the volume traded for the period.
Increased Capital Base and Impact of a Capital Raising
117. Under the Proposed Merger PFI will acquire DPF’s $414m property portfolio in exchange for
issuing shares based on an exchange ratio of 104% of DPF’s NTA / 109% of PFI’s NTA as at
28 February 2013.
118. To purchase a similar property portfolio PFI would need to raise approximately $260m in new
equity by way of either a share issue to existing shareholders, or a placement of shares to new
shareholders or a combination of both (with the balance of the acquisition assumed to be debt
funded). The cost of raising new equity could be up to 5-10% of the funds raised, allowing for
issue costs and typical rights issue or equity placement discounts.
Improved Alignment of Interests
119. As a result of the Proposed Merger, DPF’s Manager and shareholders of the manager will hold
approximately 12.8m shares representing 3.1% of PFI (3.4m shares or 0.8% of which are
presently held directly by DPF’s Manager). This shareholding reinforces the alignment of the
interests of PFI’s manager with the interests of the Non-Associated Shareholders.

Appendix A – Statement of Independence,
Disclaimer, Restrictions, Limitation of Liability,
and Indemnity
Qualifications
This Report has been prepared by the Corporate Finance division of PricewaterhouseCoopers, which provides advice on
mergers, acquisitions and divestments, valuations, independent expert’s reports and appraisals, financial investigations
and strategic corporate advice.
The Partners responsible for this Report are David Bridgman M.Com, LLB, CA and Eric Lucas BA (Hons), FCA, both of
whom have extensive experience in relation to corporate restructurings and the preparation of independent expert’s
reports for the benefit of investors.
Independence
PricewaterhouseCoopers considers itself independent of PFI and the Related Party in relation to the Proposed Merger.
Our fee for preparation of this report is based on the time required for its completion, and it is not contingent on the
success or implementation of the Proposed Merger.
We are not, and do not intend to be, a director, officer, or employee of, PFI or the Related Party.
Consent
PwC has consented to the inclusion of this Report in the Information Memorandum in the form and context in which it is
included.
Scope, Disclaimer and Restrictions
The purpose of this Report is to provide an Independent Appraisal Report, as required by NZSX Listing Rule 9.2.5,
assessing the fairness of the proposed changes to PFI’s Management Agreement to the Non Associated Shareholders.
This Report is prepared solely for this purpose and should not be used or relied upon for any other purpose.
The statements and opinions expressed in this Report are based on information available as at the date of the Report.
In preparing our Report, we have not independently verified the accuracy of information provided to us, and have not
conducted any form of audit in respect of PFI or any of its related entities. Accordingly, we express no opinion on the
reliability, accuracy, or completeness of the information provided to us and upon which we have relied.
In forming our opinions, we have relied on forecasts and assumptions prepared by PFI and PFI’s Manager about future
events which by their nature are not able to be independently verified. Inevitably, some assumptions may not
materialise and unanticipated events and circumstances are likely to occur. Therefore, actual results in the future will
vary from the forecasts upon which we have relied. These variations may be material.
The statements and opinions expressed in this Report have been made in good faith and on the basis that all relevant
information for the purposes of preparing our Report has been provided by PFI and / or its directors and advisers, and
that all such information is true and accurate in all material aspects and not misleading by reason of omission or
otherwise.
Accordingly, neither PricewaterhouseCoopers nor its partners, employees or agents, accept any responsibility or liability
for any such information being inaccurate, incomplete, unreliable or not soundly based or for any errors in the analysis,
statements and opinions provided in our Report resulting directly or indirectly from any such circumstances or from any
assumptions upon which our Report is based proving unjustified, provided that this shall not absolve
PricewaterhouseCoopers from liability arising from an opinion expressed recklessly or in bad faith.
Our opinions have been arrived at based on economic, market and other conditions prevailing at the date of our Report.
Such conditions may change significantly over relatively short periods of time.
We reserve the right, but will be under no obligation, to review or amend our Report, if any additional information,
which was in existence on the date of our Report, was not brought to our attention, or subsequently comes to light.
Limitation of Liability
PricewaterhouseCoopers will accept liability to pay damages for losses arising as a direct result of breach of contract or
negligence on our part in respect of services provided in connection with, or arising out of, this engagement but, to the
extent permitted by law, any liability of PricewaterhouseCoopers, its partners and staff (whether in contract, negligence
or otherwise) shall in no circumstances exceed five times the fees paid in the aggregate in respect of all such services.
We accept no liability to any party other than the addressee, as our client.
Indemnity
PFI has agreed to indemnify us against claims brought by any third party (which includes but is not limited to PFI
Shareholders and prospective investors). The indemnity covers PricewaterhouseCoopers for any loss or liability suffered
or incurred as a result of or in connection with the preparation of our Report. This indemnity in relation to a claim by a
third party will only apply to the extent that the costs, loss, damages or other expenditure incurred by PwC exceeds the
amount of the liability cap referred to above, and then only to the extent of that excess.
Appendix 30
Appendix B – Sources of Information
PwC has obtained all the information that we believe is desirable for the purposes of preparing this
Report, including all relevant information which is or should be known to any director of PFI or PFI’s
Manager. In PwC’s opinion the information to be provided to PFI’s Shareholders is sufficient to enable
them to understand all relevant factors and make an informed decision.
The following information was used and relied upon in preparing this Report:
 Notice of meeting and Information Memorandum in relation to the Proposed Merger
 The proposed Management Agreement of the merged entity
 Various correspondence and discussions with PFI’s Manager and PFI’s Directors
 PFI’s merged entity model supplied by PFI
 The management agreements of PFI and DPF
 NZX and NZX Listing Rules
 NZX Company Research
 New Zealand Companies Office
 New Zealand LPVs (and certain LPV’s managers) annual reports, broker reports, shareholder
announcements and websites
 DPF’s share trading history sourced from Computershare
 Capital IQ
 Other publically available information
Appendix 31
SCA Hygiene, 124a Hewletts Road, Mount Maunganui
GLOSSARY
$, NZD or NZ$ New Zealand dollars
ANZ ANZ New Zealand Limited
Application for Final Court Orders The application to the Court for Final Court Orders by PFI and DPF
BNZ Bank of New Zealand
CBA Commonwealth Bank of Australia, New Zealand Branch
Companies Act Companies Act 1993, as amended from time to time
Court or High Court The High Court of New Zealand
Directory The directory set out in this Information Memorandum
Final Court Orders The final orders of the Court to give effect to the Scheme of Arrangement,
pursuant to Part 15 of the Companies Act
DPF Management Agreement The agreement between DPF and DPFM in relation to the management of DPF’s
property portfolio
DPF Shareholders Holders of one or more DPF Shares
DPF Share An ordinary share in DPF
DPF Direct Property Fund Limited
DPFM DPF Management Limited, the manager of DPF
Forecast FY13 The Statutory Prospective Financial Information
Free float Market Capitalisation Equals the average adjusted daily closing price, for the six months to the most
recent month end, by the latest available number of “NZ Free Float Shares”
for a security. NZ Free Float Shares is defined in the NZX Equity Indices
Methodology, effective from June 2012, available at www.NZX.com
GAAP or NZ GAAP Generally accepted accounting practice, as defined in the Financial Reporting
Act 1993
Glossary This glossary of terms
Independent Appraiser PwC
Independent Appraisal Report The report prepared by the Independent Appraiser which is set out in this
Independent Expert Deloitte
Independent Expert Report The independent expert report prepared by the Independent Expert on the merits
and fairness of the Merger which is included in this Information Memorandum
glossary 193
Information Memorandum This Information Memorandum (including the Notices of Meeting)
Initial Court Orders The initial orders of the Court granted in respect of the Scheme of Arrangement
dated 9 May 2013, a copy of which is included in this Information Memorandum
Investigating Accountant KPMG
Investigating Accountant Report The investigating accountant report prepared by the Investigating Accountant
which is included in Section 6 of this Information Memorandum
Listing Rules NZSX/NZDX Listing Rules
LPV Listed property vehicle
Manager The property manager of DPF being DPFM and/or the manager of PFI, being
PFIM, as the context requires
Market Capitalisation Equals the number of shares issued of a security multiplied by the price of
the security.
Merged Group PFI (as the continuing amalgamated company following the Merger of PFI and
DPF) including, where the context permits, their respective subsidiaries
Merger The proposed merger of PFI and DPF, more fully described in the Scheme Plan
Merger Date 1 July 2013, or such later date on which the Merger takes effect in accordance with
the Scheme Plan set out in this Information Memorandum
Merger Pro Forma Prospective The Merger Pro Forma Prospective Financial Information set out in the
Financial Information Prospective Financial Information section of this Information Memorandum
Notices of Meeting The notices of meeting contained in this Information Memorandum for PFI and
DPF, respectively, for the purpose of convening the Special Meetings
NZ IFRS or IFRS New Zealand equivalent to International Financial Reporting Standards
NZX NZX Limited
NZX Main Board The main board equity security market, operated by NZX
Objection Rights Any objection rights under the Companies Act or otherwise in respect of the
Scheme of Arrangement
Offer The offer of PFI Shares by PFI to DPF Shareholders pursuant to the Merger
PFI Property For Industry Limited
PFI Constitution The constitution of PFI
PFI Group PFI and P.F.I. Property No. 1 Limited
194 glossary
PFI Management Agreement The agreement between PFI and PFIM in relation to the management of PFI’s
property portfolio
PFI Share An ordinary share in PFI
PFI Shareholders Holders of one or more PFI Shares
PFIM PFIM Limited, the manager of PFI, a wholly-owned subsidiary of DPFM
PIE Portfolio Investment Entity
Pro Forma FY13 The Merger Pro Forma Prospective Financial Information
Promoters DPF, DPFM and each of their directors (other than those directors who are also
a director of PFI as issuer)
Relevant Board Has the meaning given to it on page 56 of this Information Memorandum
Relevant Directors Has the meaning given to it on page 56 of this Information Memorandum
Scheme of Arrangement The scheme of arrangement and amalgamation to be undertaken under Part 15
of the Companies Act in accordance with the Scheme Plan
Scheme Plan The scheme plan set out in Section 8 of this Information Memorandum
Securities Act Securities Act 1978, as amended from time to time
Securities Markets Act Securities Markets Act 1988, as amended from time to time
Securities Regulations Securities Regulations 2009, as amended from time to time
Share Registrar Computershare Investor Services Limited
Special Meetings Meetings of PFI Shareholders and DPF Shareholders to approve the Merger
Statutory Prospective Financial The Statutory Prospective Financial Information set out in the Prospective
Information Financial Information section of this Information Memorandum
WALT Weighted average lease term, being the remaining lease term weighted by
contractual rental income
Westpac Westpac New Zealand Limited
Valuers CBRE Limited, Colliers International New Zealand Limited and Jones Lang
LaSalle Limited
Voting/Proxy Form The forms accompanying this Information Memorandum pursuant to which the
PFI Shareholders and DPF Shareholders may vote or appoint a proxy to vote at
the Special Meetings
glossary 195
DIRECTORY
MERGER PARTIES SHARE REGISTRAR

Property For Industry Limited Computershare Investor
Shed 24, Prince’s Wharf Services Limited
147 Quay Street Level 2, 159 Hurstmere Road
Takapuna, North Shore City
PO Box 1147
Auckland 1140 Private Bag 92119
Auckland 1142
Phone: +64 (9) 303 9450
Facsimile: +64 (9) 303 9657 Toll free: 0800 359 999 (within NZ)
Phone: +64 (9) 488 8777 (outside NZ)
www.pfi.co.nz
Facsimile: +64 (9) 488 8787
info@propertyforindustry.co.nz
www.computershare.co.nz/
Direct Property Fund Limited investorcentre
Shed 24, Prince’s Wharf
147 Quay Street INVESTIGATING ACCOUNTANT
PO Box 1147 AND TAX ADVISER
Auckland 1140
KPMG
Phone: +64 (9) 303 9650 KPMG Centre
Facsimile: +64 (9) 303 9657 18 Viaduct Harbour Avenue
www.directproperty.co.nz Auckland 1140
info@directproperty.co.nz Phone: +64 (9) 367 5800
Facsimile: +64 (9) 367 5875
LEGAL ADVISER TO
THE MERGER PARTIES INDEPENDENT EXPERT
Chapman Tripp Deloitte
Level 35, ANZ Centre Deloitte Centre
23-29 Albert Street 80 Queen Street
Auckland 1140 Auckland 1010
Phone: +64 (9) 357 9000 Phone: +64 (9) 303 0700
Facsimile: +64 (9) 357 9099 Facsimile: +64 (9) 303 0701
FINANCIAL ADVISER TO INDEPENDENT APPRAISER

THE MERGER PARTIES
PricewaterhouseCoopers
First NZ Capital 188 Quay Street
Level 39, ANZ Centre Private Bag 92162
23-29 Albert Street Auckland 1142
Auckland 1140
Phone: +64 (9) 355 8000
Phone: +64 (9) 302 5500 Facsimile: +64 (9) 355 8001
Facsimile: +64 (9) 302 5580
196 directory

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BETTER

For the purposes of Regulation 16 of the Securities Regulations,

Matter Schedule 10 Page(s)

Bridon, 6-8 Greenmount Drive, East Tamaki, Auckland

Resolution 2: Amended and

Who can vote?

08 INTRODUCTION + KEY INFORMATION

Votes, decisions and choices for shareholders

PFI Shareholders DPF Shareholders

3.00pm on 24 June 2013 11.30am on 24 June 2013 Special Meetings

24 June 2013 Last day for notices of opposition or notices of appearance

26 June 2013 Final Court Orders applied for and granted

1 July 2013 Merger Date (effective date)

1 July 2013 Shares allotted by PFI

INTRODUCTION + KEY INFORMATION 09

10 INTRODUCTION + KEY INFORMATION

INTRODUCTION + KEY INFORMATION 11

Portfolio value ($ million)

1,065 814 AVERAGE: $944M

Weighted averaged lease term (years)

6.4 6.2 6.1

12 INTRODUCTION + KEY INFORMATION

• Merged Group’s gearing in line with the market.

INTRODUCTION + KEY INFORMATION 13

Top 10 PFI Shareholders as at 31 March 2013

Top 10 DPF Shareholders as at 31 March 2013

Top 10 expected Merged Group shareholders

14 INTRODUCTION + KEY INFORMATION

Lease expiry profile by contract rental10

NZX50 Index (#20 - #49)

1200 • A larger shareholder base is likely to

of trading in PFI Shares.

On 15 April 2013, PFI and DPF announced a proposal to merge.

22 OVERVIEW OF THE MERGER

includes subsidiary: includes subsidiary: includes subsidiaries:

OVERVIEW OF THE MERGER 23

PFI was formed in 1993 as a specialist investor in high quality industrial

Contract Valuation Yield on % of portfolio

47 Arrenway Drive Onyx Group 219,800 3,000,000 7.3% 0.75%

30-32 Bowden Road Norak Properties 1,297,276 15,000,000 8.6% 3.75%

8A & 8B Canada Crescent Polarcold Stores 1,080,000 11,875,000 9.1% 2.97%

50 Carbine Road Atlas Copco 190,000 2,425,000 7.8% 0.61%

54 Carbine Road & Pharmacy Retailing 1,172,641 16,175,000 7.2% 4.05%

24 OVERVIEW OF THE MERGER

85 Cavendish Drive Greenmark Wholesaler 807,884 9,450,000 8.5% 2.36%

212 Cavendish Drive Toll Logistics 1,208,624 14,200,000 8.5% 3.55%

15 Copsey Place24 Barkers Clothing 407,360 7,550,000 5.4% 1.89%

6 Donnor Place Wickliffe NZ 1,296,167 16,200,000 8.0% 4.05%

12 Hugo Johnston Drive Bowls NZ 329,755 3,700,000 8.9% 0.93%

16 Hugo Johnston Drive Modempak 346,615 4,150,000 8.4% 1.04%

44 Mandeville Street Windflow Technology 978,918 11,050,000 8.9% 2.76%

174b Marua Road Transpacific Industries 136,440 2,045,000 6.7% 0.51%

8 McCormack Place Information Management Group 819,826 8,900,000 9.2% 2.23%

4-6 Mt Richmond Road Brambles 797,965 9,450,000 8.4% 2.36%

509 Mt Wellington Highway Fletcher Distribution 931,026 11,500,000 8.1% 2.88%

OVERVIEW OF THE MERGER 25

515 Mt Wellington Highway Stryker 253,490 3,210,000 7.9% 0.80%

523 Mt Wellington Highway BGH Group 213,741 2,990,000 7.1% 0.75%

36 Neales Road Mainfreight 1,081,841 12,650,000 8.6% 3.16%

9 Nesdale Avenue Brambles 605,000 6,860,000 8.8% 1.72%

1 Niall Burgess Road R L Button & Co 216,466 2,800,000 7.7% 0.70%

3-5 Niall Burgess Road Electrolux 1,006,654 13,300,000 7.6% 3.33%

10 Niall Burgess Road Outside Broadcasting 230,500 3,025,000 7.6% 0.76%