ING Management Limited (IML) today announced that it has convened a unitholder meeting to replace IML as the responsible entity (RE) of Investa Office Fund (ASX: IOF) with Investa Listed Funds Management Limited (ILFML).
This is the next step in the delivery of the strategy announced on 28th March 2011 when Investa Property Group (Investa) assumed management of IOF.
The unitholder meeting to be held on 7th July 2011 will vote on resolutions that will enable Investa to progress with the implementation of the strategic initiatives announced in March. In addition to the approval of a change in RE unitholders will vote on a new management fee structure.
Investa has proposed to restructure the RE fee from a percentage of assets under management to a percentage of market capitalisation with effect from 1 July 2012, delivering better alignment of interests between the Manager and Unitholders. The new fee structure which is unique amongst A-REITs, further incentivises the Manager to increase the value of Unitholders’ investment and removes the potential incentive to accumulate assets through the use of debt. Under the proposed new fee structure ILFML has also committed to a fixed fee of A$8.6 million from 1 July 2011 to 30 June 2012.
Commenting on the proposed change to the management fee Mr Scott MacDonald, Chairman and CEO of Investa said: “The restructuring of the fee is a key element to Investa’s strategy of re-positioning IOF into Australia’s leading office fund. The proposed fee structure should contribute to an enhancement of unit value, by elevating the alignment of manager and Unitholder interests to a level unprecedented in Australia.”
On becoming RE, ILFML has also committed to the introduction of a suite of new governance initiatives which will see the RE Board comprise a majority of independent directors including an independent Chairman. Unitholders will be provided with the opportunity to ratify the appointment of independent directors, with each independent director’s term not extending beyond the time of the general meeting held in the third year following the year of appointment without unitholder consent.
Commenting on the new governance initiatives Mr Campbell Hanan, Group Executive and Head of Commercial Property Investments at Investa said: “These are best practice governance initiatives for an externally managed A-REIT and are designed to give IOF Unitholders an ability to determine the composition of the independent directors on the Board of the Responsible Entity.”
The proposed change in RE will also allow Investa to maintain their commitment to provide IOF with a path to internalisation in the future.
All resolutions tabled for the July meeting have been unanimously recommended for approval by the independent directors of the IML Board.