MFL back plan to manage Argosy

Sir Bill Birch. Photo / Greg Bowker

MFL Mutual Funds, which owns about 25 per cent of the $900 million NZX-listed landlord Argosy Property Trust, will back the real estate business in its plans to internalise management.

An announcement from Sir Bill Birch, acting chairman at MFL, said the board would support the resolutions in favour of the move at the annual meeting in Auckland tomorrow.

Backing from the biggest single Argosy unitholder would result in the internalisation proceeding, and challenges from rival listed DNZ Property Fund failing, an Argosy backer predicted.

MFL said it had taken advice before deciding.

"The board will be voting in favour of the internalisation proposal and voting against the alternative termination and merger options proposed by certain other unitholders. The board sought independent advice from Cameron Partners to assist it in arriving at a decision on these matters.

"The board also sought advice on the DNZ proposal, noting that there is a lack of clarity or certainty in this proposal at the current time," MFL said.

DNZ wanted to take over Argosy and challenged a $32.5 million internalisation payment to current management-contract holder, ANZ's OnePath.

"That sum has since been lowered to $20 million but the deal is yet to be voted on.

"MFL believes there is merit in exploring merger opportunities in addition to and alongside corporatisation, and has sought assurances from the Argosy independent directors that they will actively pursue these objectives for the benefit of all Argosy unitholders as soon as internalisation has been achieved," MFL said.

"Achieving internalisation is the preferred outcome, with the benefits fully accruing to Argosy unitholders.

"MFL does not want to put that outcome at risk while other alternatives are explored, which would likely see the benefits of internalisation shared."