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Unitholders of Goodman Property Trust [NZX: GMT], the largest listed property investor by market value, will vote on restructuring how the trust pays its manager, Goodman (NZ), at today's annual general meeting in Auckland.
Under the proposed change the trust would receive a fee rebate equivalent to what it pays the manager on the development land portfolio, in return, the trust will issue the balance of the manager's fee as new units, it said in a statement. The new structure would start from April this year, and be in place for the next five years.
The trust paid an $8.7 million management fee to manager Goodman (NZ) in the year ended March 31, up from $7.5 million a year earlier, though it didn't have to pay a performance fee. It also paid total management, development management and other fees of $9.9 million to related party Goodman Property Services (NZ), up from $7.8 million a year earlier.
Internalising management is an ongoing trend by property investors looking to shed external costs and align the interests of the manager with those of investors. Kiwi Income Property moved to internal management last December after Commonwealth Bank Australia sold the contract.
"With a management expense ratio of just 0.54 percent Goodman Property Trust has one of the most efficient and cost effective structures of any listed property entity," Keith Smith, chairman of Goodman (NZ), said. "The changes being voted on today will refine an already competitive fee structure, reducing the quantum of fees paid by Goodman Property Trust."
Goodman's unitholders will also vote on recent independent director appointments.
The trust's manager reiterated its expectation for a 3 percent rise in distributable earnings in 2015. Distributable earnings after tax, a measure of profit that strips out valuation movements, rose 10 percent from the previous year to $92.9 million in 2014. The trust paid 6.25 cents to unitholders this year, and expects to pay 6.45 cents per unit in 2015.
Units in the trust fell 0.5 percent $1.07, and have gained 9.1 percent this year. The stock is rated a 'hold' by three of five analysts surveyed by Reuters, with a median price target of $1.07.