Kiwi Income Property reduces management fees for listed trust

The new fee structure would comprise a base fee of 0.55% of average gross assets (AGA) and a 10% performance fee calculated on unit holder returns over 10%, capped at 0.15% of AGA.

The total management fee payable would be capped at 0.70% of AGA, with unit holders having to approve the performance component, KIPT said in a statement to NZX.

It would be calculated and paid half yearly, starting from April 1.

Currently, fees are 0.85% of AGA up to $750 million, plus 0.65% of AGA over $750m.

"The new fee structure represents a significant reduction in fees," KIPT said in the statement.

"Depending on the level of unit holder returns and average gross assets, the annual saving to the trust will be between $900,000 and $2.7 million."

"Any under or over performance will be carried forward for two years and taken into account in the calculation of future performance fees," KIPT said.

Chairman Sean Wareing said the revised management fee would better align the interests of unit holders and management.

"The cap results in the performance fee being significantly lower than the potential performance fees that may be paid by other New Zealand listed property entities," Wareing said.

KIP would continue to waive the management fee associated with the KIPT's 19.4% investment in Capital Properties New Zealand. The new management fee is the latest twist in what has been an increasingly bitter spat with Capital.

KIPT bought its cornerstone in Capital in November last year for $1.15 a share, but has not indicated what its intentions are.

Earlier this month, AMP snapped up a 10.4% blocking stake at $1.35 a share, some market watcher speculating it could be to stop any attempt at a full takeover by another party.

Brokers spoken to by NZPA at the time said the blocking stake would likely force KIPT to sit on its Capital cornerstone, walk away from it, or begin a takeover battle.

At 5pm, KIPT shares were unchanged at $1.13, those in Capital Properties were unchanged at $1.21, and those in AMP were down 1c at $7.60.

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