Shareholder challenges Argosy deal

An investor with a $210,000 stake in the listed Argosy Property Trust is challenging the deal for ANZ National Bank to sell the management contract to unitholders.

Howard Zingel of Tauranga said he would speak out against the deal at any investor roadshow held by the Auckland-headquartered trust with 81 properties worth $946 million.

"The real problem is one of fairness and disclosure," Zingel said. "While the management fee is disclosed in the accounts and is probably in line with industry norms there are a few ramifications," he said of the proposals for Argosy to internalise management.

He and his wife owned 100,000 units and a further 200,000 units via an investment company.

Argosy's management contract is onerous, he said, and he has already challenged the trust on this.

"I am taking up the matter with the managers of Argosy," he said.

The listed trust paid the manager $6.1 million in the 2010 financial year, down on the previous year's $7 million.

Fees are calculated at 0.6 per cent of assets under management over a two-year period, using $1 billion in 2009 and $946 million in 2010.

The proposals are part of a shake-up of two real estate trusts with property valued at $1.4 billion which have seen Argosy and Vital Healthcare Property Trust announce moves to internalise management contracts owned by the bank after the ING takeover.

Argosy's independent directors Trevor Scott and Peter Brook have agreed to progress the management changes and say Grant Samuel & Associates is commissioned to provide an independent report.

Mark Lister of Craigs Investment Partners, with stakes in both trusts, said Vital's recent real estate expansion into Australia would draw interest when the management contract's sale price was being considered.

"I haven't looked at the numbers too closely just yet, but we will doing some sums. One thing that has struck me is the fact that Vital has almost doubled in size last year when they expanded into Australia. One measure people use sometimes when looking at the value of these types of contracts is the percentage of total assets that the price represents."

Other institutional investors are also running the ruler over the deals and some analysts have produced reports, particularly on Vital which has the stronger research following.

ANZ'S TWIN DEALS

Argosy Property Trust
* Management internalised for $32.5m
* Unitholders yet to vote

Vital Healthcare Property Trust
* Management internalised for $14m
* Unitholders yet to vote