Anzo becomes company in shake-up

Rob Lang. Photo / Greg Bowker

Institutional investors welcomed a corporate governance and management shakeup at AMP NZ Office Trust.

The $1.3 billion listed landlord has announced it is ditching the trust model for a company structure, lowering fees and allowing more independents to go on the board.

And in a surprise move, Rob Lang, chief executive of the trusts's manager, announced he had resigned and would leave in June.

Craig Tyson of ING (NZ) said investors would get a better deal when the trust lowered its fees.

"These are positive changes to the fee and governance structure of the trust. It shows that the board have listened to investors regarding our concerns about a lack of alignment and accountability," he said.

As the second-biggest investor with around 8 per cent, Tyson has been the most outspoken critic and he has spent months negotiating with the trust's managers, pushing for an internally managed business.

This would have totally aligned unitholder interests with those of the manager.

He expressed some disappointment yesterday the trust did not go this far.

"We would have preferred an internalisation. But the proposed structure is sufficiently attractive to be regarded as a best of breed external structure."

"Unitholders should get comfort that the manager will be incentivised to generate a return in excess of the NZ Property Index (gross) and proactively manage their capital through the cycle to achieve that outcome."

"The office sector is likely to be tough for a while given the amount of new supply planned but we're less negative on the trust now given these changes," Tyson said.

Shane Solly of Mint Asset Management said he was generally positive about the changes and praised the moves to reduce the investor-management conflicts of interest, improve investor rights and lower management fees.

"This sets a precedent that other New Zealand property securities will need to consider," Solly predicted.

Craig Stobo, chairman of trust manager AMP Haumi Management, said he had the backing of four big institutional investors: ING, ACC, Tower and Mint.

Stobo said Tyson had made a push for internalisation but mainly sought better fee structures.

"Craig has had that view consistently but at the unitholder meeting, he was looking for changes in the fee structure and for governance changes," Stobo said.

Stobo paid tribute to Lang saying he had provided quality leadership and had positioned the trust strongly as an internationally recognised business.

Candidates for his job among big investors being discussed yesterday were Kiwi Income Property Trust's Gavin Parker, Goodman Property Trust's Scott Pritchard and AMP Capital executives Peter Costley and Hamish McCulloch.

The trust manages 267,000sq m of office space, much of it leased to the Government.

Its units are trading at a discount to net tangible asset-backing resulting in the $1.3 billion real estate business having a total market capitalisation on NZX of just $728 million.

Units closed on Friday at 77c.


AMP trust changes:

* Trust becomes company.
* Lower management fees.
* More independent directors.
* Full benefits of takeover code.
* Better corporate governance.
* AGMs now become mandatory.