Trusts on surge for five years
The issue of listed property trusts retaining or buying management rights as part of security held by investors has been in the news lately.
Thursday, January 27th 2005, 8:45PM
by The Landlord
Kiwi Income Property Trust is due to hold its extraordinary meeting tomorrow to increase its debt capacity.But the management of listed property trusts received closer public scrutiny after Kiwi bought 19.9 per cent of Capital Properties and Capital indicated soon after that it wanted to sell its management rights.
Kiwi listed in 1993 at $1.03 a unit and is trading at about $1.08.
However, the management company shares - also issued at $1 in 1993 - were sold to Colonial First State Property Trust in 2002 for $57,750 each, on top of a $3580-a-share dividend paid out in the same year.
Investors who control management entities have certainly done better than investors in unit trusts.
But one of the incentives in creating a listed property trust in the first place is the option to sell the management contract.
Essentially, the management contract generates income from the asset management services provided and this cost should, in theory, reflect the ability of the manager to generate superior returns.
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