OnePath hits back over property trust deals

John Body. Photo / Greg Bowker

OnePath director John Body has hit back at critics over changes to two listed real estate trusts with $2 billion of properties.

Argosy Property Trust and Vital Healthcare Property Trust have management internalisation deals on the table from ANZ Bank's OnePath.

Those deals would see investors in the businesses take control, but pay a total of $46.5 million for the privilege - a price widely criticised by suitor DNZ, which wants to take over Argosy, and Ascot Property Management, which wants Vital's management contract so it can run the internalisation process.

Body said unfair criticisms had been made against independent directors Trevor Scott, Peter Brook, Graeme Horsley and Bill Thurston but as owner, OnePath had stayed silent long enough.

"We feel we must now make our position clear," Body said, fearing unitholders would be confused by letters and conflicting points of view in the media.

"We believe the current debate around both Argosy and Vital has distorted the merits of internalisation and understated the very real risks and likely costs associated with alternatives being put forward," he said, arguing strongly for the management sale deals now on the table.

Body accused DNZ of "trying to get its hands on the high-quality property portfolio Argosy had built up over many years" and denounced Ascot as commercially motivated.

Ascot was acting in its own self-interest and it was disingenuous of Ascot - which manages nine healthcare properties - to claim it was working in the interests of Vital unitholders, Body said.


Termination of management contracts involved risk and cost and the existing manager could cease work immediately. The trustee would then have to appoint a temporary manager, Body said.

Craig Priscott of Ascot said the business had got beyond the 10 per cent threshold needed to call a special Vital meeting, having received support from unitholders. Ascot is also talking to top-tier managers about stepping in. Priscott is confident Ascot can unseat OnePath but said the business would work with the ANZ-owned business for an orderly handover.

Tim Storey, DNZ chairman, said Ascot's aims with Vital were very different from his businesses' motivations with Argosy, which DNZ wants to take over. But Storey also hit back at Body, saying his
comments confused separate proposals.

Storey said Argosy unitholders were dissatisfied with the manager's performance and lacked confidence in the management.

DNZ's proposal was not mischievous or poorly focused and would cost investors much less, Storey said.

"Why did OnePath/ANZ try to push through this $32.5 million payment when ... you can terminate for $12 million?" Storey asked.

TAKING CONTROL

* ANZ Bank fund manager OnePath owns the management contracts for Argosy Property Trust and Vital Healthcare Property Trust.

* Both trusts want to buy their management contracts from OnePath, to give control to investors.

* The prices - $32.5m for Argosy and $14m for Vital - have been criticised as too high.