Shareholders of property firm NPT have booted two of its directors from the board and voted down a deal with the $1.7 billion Kiwi Property Group.

To replace the ousted directors, investors today also agreed to install the chair of NPT's largest single shareholder Augusta Capital and two others to the NZX-listed minnow

The result following a lively shareholder meeting in Auckland where investors voted on a proposal from the NPT board and a rival plan from Augusta.

The NPT deal had three parts.


•For $230 million, NPT would buy Kiwi's North City Shopping Centre in Porirua and its earthquake-strengthened Majestic Centre in Wellington's CBD. That would more than double NPT's size.

•Kiwi would take a 19.9 per cent stake in NPT via the issue of new shares.

•NPT would sell its management rights to Kiwi for just $6m.

Augusta, in the alternative, successfully proposed to remove NPT directors and replace them with their own appointees.

As a result of the vote, NPT chair Tony Sewell and director Jim Sherwin are leaving the company's board.

They are being replaced by Allen Bollard and Bruce Cotterill, and Augusta chair, Paul Duffy.

Carol Campbell maintains her position as an independent director.

The meeting saw terse exchanges where Sewell told Augusta Capital's founder and managing director Mark Francis to be quiet.

"Mr Francis, you've had your say," Sewell said a number of times, silencing him completely at one point.

Francis spoke out strongly against the deal.

"These people are awaiting a vote of no confidence to remove them from office," Francis told about 100 shareholders.

"This is a value destructive deal," he said, accusing the NPT board and management of being "in distress".

Augusta manages $1.7b of real estate in New Zealand and Australia and had been one of the best-performing real estate businesses.

Augusta is NPT's largest shareholder, with 18.85 per cent.

After winning the vote, Francis said in a statement to the NZX:

"The will of NPT's shareholders has seen a poor proposal rejected and the governance changed; we are grateful for the support afforded to us by those shareholders.

"As outlined to NPT shareholder... our proposed next step will be to present a proposal to externalise the management to Augusta. We can run this company for a lot less, which will realise an uplift in earnings and the current net tangible asset backing per share.

"This will also introduce a much needed alignment of interests under a proven manager motivated to deliver greater returns for all NPT shareholders," Francis said.

Salt Funds Management, which holds 13.7 per cent of NPT, was opposed to the deal and its managing director Matt Goodson also spoke during the meeting, questioning why there was no under-writer.

Salt was "compelled to speak out to protect our investors", Goodson said.

ANZ Investments with 15.3 per cent of NPT and 8.9 per cent of Kiwi, was in favour of the deal.

Craig Tyson, its equity investments manager, gave an impassioned plea during the meeting for NPT shareholders to back it, saying it would give the business scale.

"The reality is it's a vehicle which has gone nowhere and been the worst performer in one, three, five, seven, 10 years. What do you do about it? We've had five or six proposals through our doors with ideas about what to do with NPT. We entertained the Augusta deal but Kiwi came with a deal which was even better," Tyson said.

"The board are not out to do you in but to create value. NPT is too small so we have to make a decision about how to make it one of the best performers, not the worst," he said, citing Kiwi's expertise in retail property.

After the vote, Sewell told the NZX:

"If you strip out Augusta Capital and Salt Funds Management from the voting, almost 80 per cent of votes cast were in favour of the proposal. However, this was not enough to carry it on the day and so we respectfully stand aside now for the incoming Board to develop its own strategy for the future of NPT."