Bank buy blocks internalisation plan

The manager of listed landlord Vital Healthcare Property Trust, ANZ's OnePath, has ditched an internalisation makeover.

Vital directors Bill Thurston and Graeme Horsley said the internalisation deal was dead because of events outside their control.

Investors Shane Solly of Mint Asset Management and Paul Markham of St Heliers criticised the role of ANZ OnePath, saying the bank's 9 per cent buy-up of Vital units this week gave it a blocking stake.

The ANZ controls Vital's manager through OnePath, and was instrumental in the Argosy Property Trust battle which it won last month, although it got less money than it initially sought for the management.

Solly called for ANZ's OnePath to be fired.

"We will now be considering the removal at no-cost option. ANZ had the opportunity to do the right thing by investors.

"We look forward to a significant reduction in management fees as previously promised," he said.

Mint owns Vital units on behalf of investors.

Markham holds 163,012 Vital units through a family trust and he was seething about the bank's move.

"With 9 per cent plus another 4.6 per cent owned by subsidiary/related party OnePath, they will be able to block any other proposal, just like they used MFL to block any other proposals for Argosy," he said, referring to the waiver granted which allowed MFL to vote its Argosy stake and outsmart opponents.

"Once they have blocked any other proposals at the annual meeting, they can always on-sell these units they have bought.

"Even if the unit price has dropped a bit by them, they will still be in profit by charging $8 million for the management company.

"It also saves them the embarrassment and indignity of potentially being ousted by Ascot (or less likely by ACC/BT/NZ Super)," he said, referring to the triumvirate of institutional investors who fought ANZ in the Argosy battle and Ascot which sought an alternative path for the trust a few weeks ago.

OnePath corporate affairs manager Andrew Park defended the 9 per cent purchase.

"It is established business practice for the managers of NZX listed property trusts to hold units in the trusts that they manage," he said.

But he admitted that ANZ's OnePath "did not hold units previously in its own right."

On Thursday, ANZ's OnePath bought 26,100,587 units through subsidiary AUT Investments and the managing director of ANZ Wealth, John Body, said that "demonstrates ANZ's support for the manager of the trust in delivering long-term performance for unit-holders and strengthens the alignment of the interests of ANZ, the manager and all unit-holders in this pursuit."

Vital's annual meeting is to be held in December.

Who and what

Vital Healthcare Property Trust
* NZ's only listed medical/healthcare landlord
* Portfolio value $513.9 million
* 25 properties and 128 tenants
* Real estate in NZ and Australia
* Owns Ascot Hospital in Greenlane, Auckland
* Owns Epworth Eastern Hospital in Box Hill, Melbourne

Source: Vital Healthcare Property Trust