AMP NZ Office Trust front foots management fees criticism at AGM

Friday 23rd October 2009

AMP NZ Office Trust (ANZO), the country’s largest listed commercial landlord, front-footed criticism of its handling of management fees, saying it’s looking to align the interests of the trust’s manager with that of the unit holders.

Craig Stobo, chairman of the trust’s manager, AMP Haumi Management Ltd., told unit-holders at the annual meeting in Wellington that it’s looking to marry the company’s fee to unit-holders’ financial interests, rather than benefit from the value of ANZO’s assets. This will see it receive a lower base fee and incorporate a performance element.

“The introduction of a long-term incentive scheme which connects their financial interests with those of unit-holders” will bring the two groups closer together, Stobo told unit-holders. He apologised for the delay in a review of management fees, and confirmed it would be backdated.

ING New Zealand, the second-largest investor in the commercial landlord, has criticised the existing fee structure and was pleased to see the move towards greater alignment, though its representative Craig Tyson condemned the board’s decision not to pay off 100% of its bank debt in October last year, saying it would have been better off selling assets.

Chief executive Robert Lang stood by the decision to retain assets, stressing the trust is a long-term holder of assets, but admitted the trust made a mistake in only paying 50% of its bank debt when had the opportunity to do so.

Lang said finding tenants for 21 Queen Street is a high priority, and Stobo said Haumi would initially slash its fee by 50% on the property. This will progressively return to normal levels in proportion to the net lettable area leased, until 75% of occupancy is achieved.

ANZO also announced its first-quarter results, which saw revenue increase 6.8% to $35 million, and distributable income climb 20% to $16.1 million. Still, the vacancies in 21 Queen Street dragged down the portfolio rate to 90%, which Lang said was concerning.

Lang said the outlook for the trust was improving, though it was still a tough time for commercial property owners. He told investors they should receive a gross distribution payment of 7.058 cents per unit in 2010, up from this year’s 6.92 cents.

The shares were unchanged at 85 cents in trading on the NZX yesterday.

Businesswire.co.nz

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