Government and NZX focus on real estate investment

Real estate investor rights could be strengthened if submissions to the Government's review of the financial sector make their way into the final discussion document due out this winter.

But the Government is not the only one looking at the sector.

NZX has also formed a working party to investigate the issue but a spokesman said it was yet to reach any definite conclusions.

Investor disenchantment with dealings by a group of listed property trusts in the past year have sparked a range of submissions that are understood to criticise the dealings of entities who control more than $2 billion of property.

Angela Foster, an analyst with the regulatory and competition policy branch of the Ministry of Economic Development in Wellington, said a review of unitholder rights was under way as part of the much wider review of financial products and providers. She said NZX's investigations were running parallel with the ministry's review.

A ministry discussion document on the review is expected to be circulated for consultation in either June or July after submissions were called for from a wide range of industry groups and representatives.

Consultation meetings will be held later in the winter to get feedback.

Policy proposals are expected to go to Cabinet before Christmas, with legislation planned to be passed by 2008.

Foster said although the review was not aimed particularly at listed property trusts, it would address the rights of unitholders and the governance of unit trusts and property trusts as part of its much wider examination of the financial sector.

Groups who agitated at investor meetings and behind the scenes against the actions of the listed property trusts in the past few months have been consulted as part of the review.

The ministry sought submissions from interested parties, including institutions that lobbied for changes to the $1.2 billion listed Kiwi Income Property Trust which altered its trust deed so the manager be required to hold a general meeting, unitholders' motions be put to meetings as a matter of right and the number of unitholders needed to call for a meeting be lowered from 10 per cent to 5 per cent.

A band of six institutional investors led by Brook Asset Management were behind the push for changes at Kiwi, which has sparked a corporate governance overhaul.

ING Property Trust also announced a major rule change this year and criticised other trusts for not bringing their rules into line. That led to the other trusts saying ING had the wrong information and only organisations with corporate governance structure issues were forced to change. ING also came under fire for buying the management of Calan Healthcare Properties Trust shortly after increasing its stake in the trust and announcing it wanted to buy the NZX-listed entity.

Investors in Wellington's Capital Properties also voiced opposition to AMP's takeover, saying the market would lose the best listed property entity.

REFORM CALL

* Kiwi Income Property Trust investors called for a rule overhaul last year.

* Capital Properties investors were disenchanted with its sale to AMP.

* Calan Healthcare Properties Trust unitholders objected to its management sale.