National Property will make savings in restructure

National Property plan to convert to company could save $550k a year plus more in fees avoided

July 8 (BusinessWire) – National Property Trust would initially save $550,000 a year by buying out its management contract and converting to a regular NZX-listed company, according to one of the advisors hired to assess the proposal.

Additional savings would come from no longer having to pay a performance fee to an external manager, Northington Partners said in its report, according to a statement from the manager. The similarly named National Property Trust Ltd. is one of two vehicles in the St Laurence group that escaped the parent’s receivership.

“The money currently paid out in external fees will instead be retained within the company, and buying out the manager removes an overhang of units in the market and should lead to an increase in unit value,” said Andrew Walker, a director of the manager. Bringing the management contract in-house will result in “a singular focus on protecting the interests of shareholders and maximising shareholders’ returns.”

The manager agreed to develop an exit strategy, relinquishing its management rights for $2.5 million and selling back its holding in the property investor after pressure from a group of unitholders including the Cushing family. The group says the trust has performed poorly under the St Laurence umbrella and current arrangements are untenable.

Under the proposal, unitholders would swap their securities for shares in the new company. The company would buy back the manager’s 31.95 million units for 51 cents apiece, or $16.3 million. The units fell 1.9% to 51 cents today and have climbed 36% in the past 12 months, more than three times the gain of the NZX 50 Index.

The trust also commissioned Grant Samuel & Associates to assess the performance of the manager since it took over in 2006. The statement from the manager said Grant Samuel has concluded that the trust’s financial position had “materially improved” in the period under review and its performance compared favourably with other NZX-listed property trusts

(BusinessDesk)

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