F&C REIT has been retained as the manager of a £770m listed property trust after originally having its contract terminated.
Today the board of the F&C Commercial Property Trust said it had reached an agreement with F&C REIT to continue the management of the fund.
The board of FCPT had previously served a termination notice on F&C REIT after recommending the merger of FCPT with the £860m UK Commercial Property Trust, managed by Ignis Investment.
The combined £1.7bn trust was to be managed by Ignis, which would have meant the loss for F&C REIT of its largest individual management contract, worth around £6m a year. Independent shareholders in FCPT voted against the merger by the finest of margins, with just 0.14% more shareholders preferring not to merge.
The value of the management contract to F&C REIT is set to have dropped, due to a reduction in the management fee it will be paid for managing FCPT. The maximum annual management fee it will be paid has been reduced from 1% of total assets to 0.6% of total assets, with the base management fee dropping from 0.6% of total assets to 0.5%.
F&C REIT has agreed to waive any fee it was owed due to outperformance of the fund at 30 September.
In a statement on the new management agreement FCPT said: “The revised management terms, which the board considers to be competitive, will result in a significant reduction in the company’s total expense ratio and will have a material beneficial impact on the company’s dividend cover. The board is moving forward with F&C REIT for the constructive development of the company and for the benefit of all the company’s shareholders.”
FCPT chairman John Stephen added: “The directors are delighted to have agreed new management terms with F&C REIT which will result in reduced expenses and secure continuity of portfolio management under F&C REIT and Richard Kirby. With a top quartile performance track record and a well diversified and prime property portfolio, we believe FCPT has a strong future as an independent company and we look forward to delivering value for all of our shareholders.”
michael.phillips@estatesgazette.com
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