Independent directors of the Argosy Property Trust have recommended unit-holders approve "internalisation" of management rights, paying off the existing management company with $20 million.

The current manager, Argosy Property Management, is owned by OnePath, an ANZ company.

The independent directors, Peter Brook and Trevor Scott, said an independent appraisal by Grant Samuel found that the proposed internalisation would be fair to unit-holders not associated with the management company.

Proposed alternatives included having the DNZ Property Fund take over Argosy or, as sought by some unit-holders, having the trustee dump the management company without compensation.


DNZ had not made a formal takeover offer for Argosy but expressed an interest in issuing DNZ shares in exchange for Argosy units, without detailing the ratio at which they would be issued. During the takeover it envisaged acquiring the management rights.

The appraisal said that a removal of the manager by the trustee was "on the surface" the lowest cost option, but would put the trust at risk of litigation and would still require a temporary external manager to be paid.

The independent directors yesterday issued a notice for the trust's annual meeting on August 30, with a recommendation to terminate the existing management arrangement by paying OnePath $20 million, which they said was at the lower end of Grant Samuel's valuation range of $19.7 million to $23.7 million.

Such a deal would provide a forecast dividend of 6c a unit for the current financial year, rather than 5.5c a unit without internalisation.

Argosy was established as Paramount Property Trust in 2002 and taken over in 2003 by ING.