Focus on investor returns, firms told

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An institutional investor with units in two listed real estate trusts says internalisation alone will not improve governance.

Shane Solly of Mint Asset Management said changes called for at Argosy Property Trust and Vital Healthcare Property Trust would not be brought about by a single step.

"The only true answer to improving governance in listed property securities, just as it is with all listed companies, is making sure boards and management are focused on returns to unit-holders and shareholders, not just increasing returns to the management teams of the securities.

"Just like any other listed company, being an internally managed security doesn't stop boards and management from doing stupid things that destroy value for investors."

He pointed to Australian listed property securities which have had value destroyed.

"The same question can be asked of investors in a number of listed Top 10 index weight New Zealand companies where boards and management forgot they work for shareholders," he said.

"We have been working with the boards of both vehicles to improve outcomes for equity investors for some time.

"Early on, we let the Argosy and Vital independent directors know that we were not supportive of the prices of the proposed internalisations.

"We keep pressure on company boards and management to focus on improving outcomes for equity investors and that pressure won't be falling any time soon."

TWIN DEALS

Vital: $14m internalisation.

Argosy: $20m deal, was $32.5m.

* Investors are yet to agree.

* Voting at meetings soon.