Cushings oppose 'ridiculous' National property fee change

Monday 21st July 2008

The Cushing family plans to oppose a "ridiculous" proposal to alter the structure of fees paid to the manager of National Property Trust, whose units have sunk about 50% in the past five years.

H&G, the investment arm of the family of corporate highflier Selwyn Cushing, will vote its 5.5 million units in National Property Trust against proposals to allow manager St Laurence to impose new property service fees. The vote is scheduled for a July 29 special meeting of unit-holders.

"The proposed changes are not in the best interests of unit holders," H&G director David Cushing said in a statement. The changes "are simply going to increase returns to St Laurence."

St Laurence last month quit lending and withdrew its prospectus because of the "considerable risk" it may fall into default, managing director Kevin Podmore said at the time. Podmore resigned as a director of Dorchester Pacific last week to focus on his role at St Laurence.

Under the new structure proposed for National Property, St Laurence would get a reduced base fee. At the same time, its performance fee, currently set at 20% of the annual increase in the capital reserve fund, would kick in once the trust's performance outpaced the NZX Property Index as a whole. The manager would also be entitled to collect fees for services such as project management, property disposal and rent reviews.

"Given the poor performance of the National Property Trust and vast discount to NTA backing of approximately 50%, for St Laurence to capture another performance fee if the units are simply re-rated to the average discount of the trust's peers is totally unacceptable and inequitable," Cushing said.

St Laurence is the parent of the National Property Trust, manager of National Property Trust. It cited a report by Grant Samuel & Associates when the proposed fee changes were announced on July 11, which concluded the changes "are current market practice" and align the fee structure with that of other property trusts.

Units of National Property Trust rose 2% to 51 cents.

By Jonathan Underhill

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