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AMP NZ Office offers to give up more ground

Wednesday 20th October 2010

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AMP NZ Office Trust has offered to give up more ground on its management fee as investors prepare to vote on whether to restructure the listed property entity into a company tomorrow.

The trust’s manager, AMP Haumi Management, will further reduce its management fee if the corporatisation bid goes ahead, adding a third tranche to its original offer.

Its original offer to cut its base fee to 0.55% of the portfolio’s value up to $1 billion, and 0.45% above $1 billion, down from 0.65% of gross assets, was deemed “significantly higher than the market leading fee models” by independent adviser KordaMentha. If the deal goes ahead, it will add another level of 0.35% for the value of any property above $1.5 billion.

ANZO chairman Craig Stobo said the trust’s manager has agreed in principle to cut its fee if the restructuring proceeds, though no amendment has been made to tomorrow’s resolutions.

“This will occur once required approvals are obtained,” he said.

The decision came after institutional investors convinced the property investor’s manager to a further fee reduction.

Last year, fund manager ING New Zealand, then the trust’s second-biggest investor, criticised the fee structure and condemned ANZO’s decision to take on more bank debt rather than sell assets. At the time, then chief executive Robert Lang stood by the decision by said in hindsight the company should’ve repaid more debt when it had the opportunity to do so.

The shares were unchanged at 77 cents in trading today, and have gained 1.3% this year.

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