AMP NZ Office changes not enough, says analyst

Craig Stobo, chairman of AMP NZ Office Trust. Photo / Paul Estcourt

The $1.2 billion landlord AMP NZ Office officially begins trading as a company on the NZX today after winning backing to convert from a listed trust.

But one analyst says the changes do not go far enough.

Jeremy Simpson of Forsyth Barr said the outcome was a significant improvement but it was not best practice.

"There is substantially higher alignment of interest between investors and the manager with a board controlled by independents and an incentive fee structure in place," Simpson said in an analysis.

He said the vote to change the trust to a company had been assisted by the manager providing a late sweetener for investors by promising to reduce base management fees.

"The restructuring process highlighted the high level of additional fees a number of the listed property vehicles charge investors or tenants for property management functions.

"It is avoiding this leakage that is the key strength of an internal structure. With the late lowering of base fees for any further portfolio expansion, the remaining key point of contention was the entrenchment of the new management contract."

This might increase the amount investors would have to pay to buy out the manager for any future internalisation, but it would be in part offset by the fact that it would be harder to develop the business, and hence fees, through acquisition and development with the new board structure.