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Reduction In Management Fee For Corporatised ANZO Agreed In Principle

Fuseworks Media
Fuseworks Media
Reduction In Management Fee For Corporatised ANZO Agreed In Principle

The manager of AMP NZ Office Trust (ANZO) announced today that a reduction in its management fee entitlement has been agreed in principle (should ANZO be corporatised), following investor feedback on proposals to change ANZO's corporate structure, governance and management fee.

ANZO unit-holders are meeting tomorrow [Thursday 21 October 2010] at Auckland's Langham Hotel and are being asked to approve two separate proposals:

A new management fee structure, with a tiered base asset management fee and a performance fee based on relative outperformance over other NZX-listed property vehicles The conversion of ANZO from a unit trust into a company, which will be externally managed under a new management agreement, under the supervision and strategic direction of a new board of directors of the company. The new board will include a majority of directors who are independent of the manager. The fee structure will be equivalent to the revised structure contained in the first proposal.

ANZO chairman Craig Stobo said that, following discussion with institutional investors, the manager had agreed in principle to a reduction in its management fee entitlement, should the conversion of ANZO to a company go ahead. The resolutions to be considered at tomorrow's meeting will remain unchanged, but unit-holders can cast their votes knowing that there is a commitment in place to amending the management contract for the corporatised ANZO, subject to obtaining any necessary approvals from investors.

If the proposals to be voted on by investors tomorrow are approved, ANZO's management fee (currently 0.65 percent of assets) will be replaced by a more sophisticated fee structure, involving a tiered base asset management fee of 0.55 percent of the value of investment properties up to $1 billion and 0.45 percent above this point, plus a performance fee based on relative outperformance over other NZX-listed property vehicles.

Mr Stobo said the planned amendment would then see a third tier introduced into the base asset management fee for the corporatised ANZO, with the new base management fee structure becoming 0.55 percent of the value of investment properties up to $1 billion, 0.45 percent of that value between $1 billion and $1.5 billion, and 0.35 percent of that value to the extent it exceeds $1.5 billion. The planned amendment would not affect the performance fee component of the manager's fee entitlement or the manager's entitlements to fees for additional services, which would remain as outlined in the Information Pack sent to investors on 5 October. Neither would it apply to the revised fee for ANZO should it remain a unit trust, rather than be converted to a company.

Once the detailed wording of the amendment had been finalised, Mr Stobo said it would require either approval by ordinary resolution of ANZO investors at a further meeting under the "related party transaction" provisions of the NZX listing rules, or alternatively a waiver (or ruling) from NZX to the effect that no such approval is required. The manager would intend to arrange for approval as soon as possible, with any investor meeting likely to be held early next year if required.

In the meantime, Mr Stobo said tomorrow's investor meeting would proceed as outlined in the notice of meeting. "There is no amendment proposed to the resolutions for discussion at the meeting and, assuming they are passed, the new management contract for the corporatised ANZO will not initially contain the revised base management fee. This will occur once required approvals are obtained."

About ANZO

ANZO is New Zealand's largest listed investor in prime and A-grade commercial office property. A unit trust listed on the New Zealand Exchange, ANZO currently owns 15 New Zealand office buildings - Auckland's PricewaterhouseCoopers Tower, ANZ Centre, 151 Queen Street, AMP Centre and 21 Queen Street; and Wellington's State Insurance Tower, Vodafone on the Quay, HP Tower, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House, Mayfair House, AXA Centre, Deloitte House and 29 Willis Street (Chews Lane).

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