Office trust details its big shake up

AMP NZ Office Trust's PricewaterhouseCoopers tower is worth $212 million. Photo / Supplied

Details of sweeping changes to New Zealand's largest listed commercial landlord are being sent to thousands of investors.

Craig Stobo, chairman of AMP NZ Office Trust's manager, yesterday said the package revealing reforms had been sent out.

The overhaul will see the trust become a company, a big governance shift with more independent directors and a new management fee structure.

The trust owns 266,264sq m of floorspace in properties valued at $1.2 billion but its units trade on NZX at 76c, below net asset backing, giving it a market capitalisation of $768 million.

Institutional investors were yesterday awaiting the info packs, some criticising the trust for being so late with the reforms which were announced last October.

One investor said he suspected the overhaul could be a pointless exercise because the trust had so many problems, like its almost-empty 21 Queen St, a building without naming rights at the foot of Auckland's main street which trust executives are desperately trying to lease.

But Craig Tyson, of ING (NZ) equity investment manager, welcomed the big shift. "What we're looking for is to see whether they have made any further changes to their fee structure following feedback from institutional investors that the proposed management fee changes did not go far enough," he said.

Scott Pritchard, the new chief executive of the trust, said the information pack including the independent appraisers report would be on their website from late yesterday.

"Once the prospectus is printed, it will be sent to unit-holders on October 5," he said.

Stobo blamed "regulatory authorities" for the delays and said that the trust had initially hoped to distribute details of the changes about two months ago.

He was well aware people thought the management had been tardy on the deal but said he was helpless to change this because formal approval of the process had to be sought.

The trust's management is jointly owned by Abu Dhabi's Haumi and AMP Capital Investors. Haumi has Mohamed Ahmed Darwish Karam Al Quabaisi on the board of AMP Haumi Management.

He is a graduate of Seattle University and looks after China, India, Japan, Australia and New Zealand for the Abu Dhabi Investment Authority Real Estate Department.

Stobo said a unit-holder information pack was registered with the Companies Office yesterday, then mailed to all Anzo unit-holders who will meet on Thursday, October 21, at Auckland's Langham Hotel to vote.

The proposals were the culmination of a year's work, including consultation with existing investors, and were supported by the board of the trust's manager, as well as all necessary regulatory approvals.

"The initiatives were first announced at Anzo's annual meeting in October 2009, with additional detail provided in a progress update in February 2010. The proposals are intended to further enhance the alignment between Anzo's manager and investors, improve governance and to best position Anzo for continued success," Stobo said.

Investors will be asked to approve 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

They will also vote on a proposal to convert the trust into a company, which will be externally managed under a new management agreement, under the supervision and direction of a new board of directors.

The new board will include a majority of independent directors elected by investors.

After the corporatisation Don Huse and Graeme Wong are expected to join Stobo and Graeme Horsley as independent directors, Stobo said.

TOP BLOCKS

Anzo's most valuable buildings

PWC Tower, Auckland
* 2010 - $212m
* 2009 - $243m

ANZ Centre, Auckland
* 2010 - $170m
* 2009 - $190m

State Insurance, Wellington
* 2010 - $120.6m
* 2009 - $122.5m

Vodafone, Wellington
* 2010 - $97.4m
* 2009 - $102m

AMP Centre, Auckland
* 2010 - $91.1m
* 2009 - $100.5m

Source: AMP NZ Office Trust annual report 2010