CENTURIA CAPITAL GROUP — Board/Management Information 2018

Nov 7, 2018

Australian Securities Exchange – Company Announcements Platform

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Centuria Capital Group

LETTER FROM CNI TO PLG BOARD

Sydney, 8 November 2018:

Centuria Capital Group (Centuria or CNI) attaches a letter that was sent to the Board of Propertylink earlier today.

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For more information, please contact:

John McBain

CEO

Centuria Capital Group Phone: 02 8923 8910 Email: john.mcbain@centuria.com.au

About Centuria Capital Group

Centuria Capital (CNI) is an ASX-listed specialist investment manager with $4.5 billion in funds under management. We offer a range of investment opportunities including listed and unlisted property funds as well as tax-effective investment bonds. Our drive, allied with our in-depth knowledge of these sectors and intimate understanding of our clients, allows us to transform opportunities into rewarding investments.

www.centuria.com.au

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8 November 2018

To the board of directors Propertylink Level 29, 20 Bond Street SYDNEY NSW 2000

Dear Sirs

Adjournment of the extraordinary general meeting of PLG securityholders scheduled for 15 November 2018

I am writing on behalf of the Board of the Centuria Capital Group ( CNI ), the second largest securityholder in Propertylink Group ( PLG ) with a 19.5% interest in PLG.

Background to the Letter

CNI originally requested an Extraordinary General Meeting ( EGM ) of PLG securityholders to renew the PLG Board on 20 September 2018. On the day following CNI’s request, ESR Real Estate (Australia) Pty Limited ( ESR ) made an indicative non binding proposal to acquire all the remaining securities in PLG for $1.15 per security ( ESR Proposal ).

The PLG Directors dispatched the Notice of Meeting ( NoM ) for the EGM on 11 October 2018 without, amongst other things, any disclosure on the status of negotiations with ESR regarding the ESR Proposal.

On 16 October 2018, the PLG Directors signed a Process Deed with ESR to progress the ESR Proposal. The PLG Directors announced their intention to unanimously recommend the ESR Proposal subject to certain conditions. The Process Deed outlined the terms and steps required to finalise the ESR Proposal. In line with the Process Deed, the PLG Board was to negotiate and enter into a Bid Implementation Agreement ( BIA ) by 5 November 2018.

On 6 November 2018, the PLG Directors extended the negotiation period until 9 November 2018 which is only four business days prior to the proposed EGM date. They provided no additional details regarding the ESR Proposal. Importantly, as ESR are in a due diligence phase, PLG securityholders cannot be certain that the ESR Proposal will progress further.

Recent communications with PLG Directors regarding the EGM

On 1 November 2018, we requested that the upcoming EGM be deferred due to:

• a) Material inaccuracies and omissions in the NoM, including the omission of a statement we had provided for inclusion, which PLG was obliged to include in the NoM, as well as certain statements about the experience and independence of the proposed replacement directors; and

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• b) The material uncertainty caused by the ESR Proposal. In particular, we noted that we were concerned that until a BIA is entered into, Propertylink (Holdings) Limited ( PHL ) securityholders would not know the material conditions and terms of the takeover.

On 6 November 2018, we note PHL wrote to its securityholders acknowledging they erroneously excluded details of the member’s statement provided by CNI. However PHL failed to correct the other inaccuracies contained in the NoM.

Reasons for deferring the EGM

CNI’s view is that, given recent developments, PHL securityholders have insufficient information to vote at the EGM scheduled for 15 November 2018 and the meeting should be deferred. This is for the two reasons set out below.

1) Insufficient time for PLG securityholders to consider the implications of the ESR Proposal

PLG securityholders currently have no information about the progress of negotiations with ESR, other than the fact that the due diligence period has been extended to 9 November 2018. In particular, securityholders do not know whether a transaction will proceed and, if it does, the terms and conditions of the offer (including price).

PLG securityholders are not fully informed and this uncertainty will continue until the BIA is signed and announced or, alternatively, there is an announcement by either PLG or ESR that the ESR Proposal has been abandoned.

Even if a BIA were executed on 9 November 2018 (ie at the end of the revised negotiation period), we are concerned that securityholders will have insufficient time to consider the terms of the offer and how it affects their vote at the EGM.

In this context, we consider that PLG should defer the EGM to give securityholders sufficient time to consider how they want to vote at the EGM after definitive information about the ESR Proposal has been released to the market.

Deferring the meeting would also be equitable. ESR is PLG’s largest securityholder. ESR has been privy to inside information through the due diligence process and their intentions regarding the takeover. We think all securityholders should receive adequate information around ESR’s intentions before deciding how they will vote.

2) Omissions and inaccuracies in the NoM sent by the PLG Directors

CNI continues to have the following significant concerns with what it sees to be false and misleading statements in the NoM about the current PLG Directors and the proposed new PLG Directors:

• Statement 1 : In paragraph 9 of the NoM, PLG states that “ Together the Centuria nominees have limited Australian property industry experience relative to the current directors ”. We do not understand how the PLG Directors consider they have a reasonable basis to make this statement for the following reasons.

CNI has put forward six individuals who bring extensive experience in the property funds management and property investment fields together with a range of valuable and complementary corporate governance and ASX-listed management skills to strengthen the Board’s capabilities.

Four of the candidates proposed by CNI have extensive backgrounds in property funds management, including a former CEO and Managing Director and a former Executive Director and CFO of Mirvac Group, ex COO of Abacus Group, the former CEO of Australian Property Group Management (operations subsidiary of ASX listed - APG). Two have a significant background in corporate advisory and law, and one has a background in investment banking and finance. They each have considerable experience in their fields.

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By contrast, only 2 of the current PLG Directors (not including Mr Stuart Dawes who is being retained) have property funds management or direct property experience – Mr Peter Lancken and Mr Stephen Day. The remaining current directors are either ex-lawyers or exinvestment bankers without significant operational property funds management or property experience (other than experience gained whilst directors of PLG).

Statement 2 : Again in paragraph 9 of the NoM, PLG states “ As a number of the Directors proposed by Centuria have affiliations with Centuria, they may not meet the independence guidelines set out in the ASX Corporate Governance Principles and Recommendations and may not be independent .”

This statement is entirely inaccurate. Indeed from the comparison set out below, if CNI’s resolutions were successful, 5 out of 7 of the directors would be independent. By comparison, in our view, none of the current PLG Directors are independent.

Proposed Directors

Proposed	Status	Description
Director
Michael Figg	Independent	Mr Figg meets all criteria of independence under the current and proposed ASX Corporate Governance Principles and Recommendations.
Nicholas Collishaw	Non- independent	Mr Collishaw is a director of CNI which is a substantial shareholder of PLG and, as such, is not independent.
Ellis Varejes	Independent	Mr Varejes meets all criteria of independence under the current and proposed ASX Corporate Governance Principles and Recommendations.
Gregory Dyer	Independent	Mr Dyer meets all criteria of independence under the current and proposed ASX Corporate Governance Principles and Recommendations.
Evelyn Horton	Independent	Ms Horton meets all criteria of independence under the current and proposed ASX Corporate Governance Principles and Recommendations. We note that Ms Horton is currently a director of Centuria Life Limited, a wholly-owned subsidiary of CNI. Centuria Life Limited is a life insurer whose directors have duties under applicable laws to give priority to policy and bond holder interests. Our view is that given the nature of Ms Horton’s duties, her independence is not compromised by beinga director of a subsidiaryof a substantial holder.
Maxwell James Green	Independent	Mr Green meets all criteria of independence under the current and proposed ASX Corporate Governance Principles and Recommendations.

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Current Directors

Proposed	Status	Description
Director
Peter Lancken	Not independent	Mr Lancken has been a director since May 2000 – ie more than 18 years. ASX states in Recommendation 2.3 of the ASX Corporate Governance Principles and Recommendations that the board should consider a director’s independence once they have served for longer than 10 years. 18 years is well in excess of this.
Stephen Day	Not Independent	Mr Day is an executive director.
Anthony Ryan	Not Independent	See PLG’s 2018 Corporate Governance Statement.
Ian Hutchinson	Not Independent	Mr Hutchinson is a consultant of Herbert Smith Freehills which is currently providing material legal services to PLG. Under the current principles (box 2.3) a position that is an indicia of non-independence includes a “…senior employee of a provider of material professional services to the entity…”.
Sarah Kenny	Not Independent	Ms Kenny is a consultant of Herbert Smith Freehills which is currently providing material legal services to PLG. Under the current principles (box 2.3) a position that is an indicia of non-independence includes a “…senior employee of a provider of material professional services to the entity…”.
Chris Ryan	Not Independent	Mr Ryan has been a director since May 2000 – ie more than 18 years. ASX states in Recommendation 2.3 of the ASX Corporate Governance Principles and Recommendations that the board should consider a director’s independence once they have served for longer than 10 years. 18 years is well in excess of this.

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Way forward

In light of the material uncertainty with respect to the outcome of discussions with ESR and materiality of the false and misleading statements noted above, we consider that PLG needs to take the following actions promptly:

• Adjourn the meeting to give all PLG securityholders enough time to be sufficiently informed of the outcome of negotiations regarding the ESR Proposal and provide a reasonable timeframe to consider the implications on their voting intentions;

• Send a notice correcting the misleading and deceptive statements noted above.

To give PLG securityholders adequate time, we think the adjournment should be at least 10 business days after a definitive announcement in relation to the ESR Proposal has been made (whether entry into a BIA or the parties to the Process Deed publicly agree not to proceed with the ESR Proposal). We reiterate that CNI, having requisitioned the meeting, will consent to an adjournment of the meeting for that period of time.

If the EGM is not adjourned, CNI will consider requisitioning another meeting to renew the PLG Board if it considers it is in the interests of all PLG securityholders to do so after information about the BIA is released to the market.

Yours sincerely

John McBain Group CEO

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