Investors score as Kiwi fees nosedive

Kiwi Income Property Trust's manager has bowed to pressure to reduce its fees and is promising savings to unitholders - under a new structure unveiled yesterday - of from $900,000 to $2.7 million.

Trust manager Kiwi Income Properties asked Deloitte Corporate Finance for a review of its fund and property management fees to decide if they were reasonable.

The result is the dropping of a 0.85 per cent fee charged on average gross assets up to $750 million, plus a 0.65 per cent fee on assets above that, giving a blended rate of about 0.78 per cent.

The new structure is a base fee of 0.55 per cent of assets and a performance fee based on unitholder returns above 10 per cent.

A new fee cap has also been introduced.

The total fee payable to Kiwi's manager cannot go above 0.7 per cent of average gross assets and the fees will be calculated and paid half-yearly.

No performance fee will be paid unless the trust delivers unitholders with a return over the 10 per cent threshold.

Macquarie Goodman Property Trust has just reduced its base fee from 0.7 per cent of gross assets to 0.5 per cent for gross assets up to $500 million and 0.4 per cent after that.

Sean Waring, chairman of Kiwi's manager, said under the new system the interests of unitholders and the manager would be more closely aligned.

The Deloitte review found unitholders would be better off under the new deal.

Charging a base fee of 0.55 per cent of assets would be at the lower end of the range of fees charged by other listed property trusts and companies.

Deloitte said the fee change was part of an international movement.

"Recent trends in the New Zealand and Australian listed property sector are for the introduction of performance-related fund management fees," it noted.

The fee change comes into effect tomorrow.

What others charge

* Calan Healthcare Properties Trust: 0.75 per cent of gross assets as a base fee.
* National Property Trust: fee based on 0.75 per cent of gross assets.
* Property For Industry: 0.70 per cent of gross assets.
* AMP NZ Office Trust: 0.65 per cent of gross assets.
* Kiwi Income Property Trust: charged the highest fee - 0.78 per cent. Now, it claims it will be one of the cheapest, charging a 0.55 per cent base fee.
* Urbus Properties: fee based on 0.50 per cent of gross assets.
* Macquarie Goodman Property Trust: 0.50 per cent of gross assets.