Matrix European Real Estate Investment Trust Limited ("the Company")
Selection of new Investment Manager
In October 2011 the Company announced that its Manager, Matrix Property Fund Management (Guernsey) Limited ("MPFM"), had served 12 months notice to terminate the investment management agreement with the Company. The Company subsequently announced the appointment of Klockensteijn B.V. as a consultant to the Companyin order to facilitate the sales programme, in accordance with the revised investment objective, approved by shareholders on 5 August 2011, to effect an orderly disposal programme and return surplus capital to shareholders.The Company has since returned approximately £7.1 million to Shareholders via redemptions in October 2011 and April 2012.
As a result of the termination notice, the Board conducted an extensive review of the options that may be available to the Company for the management of the property portfolio once the current investment management agreement expires. This culminated in a competitive process in which five parties, including MPFM, were invited to make proposals to the Board.
Pursuant to this review, the Board is pleased to announce that the Company has this week agreed Heads of Terms to appoint Schroder Property Investment Management Limited ("Schroders") to manage the Company's portfolio in accordance with the revised investment objective with effect from the end of the 12 month notice period or earlier as agreed by the Company, Schroders and MPFM.
Crispian Collins, Chairman of Matrix European Real Estate Investment Trust Limited, commented:
"A great deal of work has been undertaken by the Company and its advisers reviewing the options available to the Company to best meet the objective to effect an orderly disposal programme and return surplus capital to Shareholders. The Board was impressed with the quality of proposals received for the management of the Company's portfolio and welcomes the opportunity to work with Schroders who offer a pan European property platform with an established team and a strong track record of transacting and winding up property funds in difficult European markets, which ultimately should realise best value for shareholders".
Schroders Property Investment Management has managed property funds since 1971. It has €12.6 billion of gross property assets under management (at 31st March 2012) and has over 90 property staff located in 9 offices across Europe including the UK. The Schroders property team is experienced in managing listed property investment companies in the UK and across Continental Europe. It will be led by Duncan Owen and supported by a senior European fund manager with local and specialist teams including France, Germany and the Netherlands. Duncan Owen commented "We are delighted to be given this opportunity to maximise shareholder returns in the Company. The strategy set out by the board is clear and our experience across Continental Europe as well as in managing listed property investment companies provides a strong platform from which to execute this strategy."
The appointment of Schroders is conditional on, inter alia, regulatory approvals, the finalisation of the necessary documentation and consent from the Company's lender.
In the interim period, between now and the appointment of Schroders, the Board and Klockensteijn will be assisting Schroders to plan a smooth transition. Klockensteijn shall continue to provide consultancy services to the Company in order to facilitate the sales programme.
Under the Heads of Terms, the Company has agreed, subject to final contract, to pay Schroders an aggregate base management fee monthly in advance at a rate equal to one twelfth of €1 million per annum for an initial 12 month period following their appointment, reducing to €0.6 million for the second year, subject to a minimum aggregate management fee of €1.6 million for the two year period. In the event that Schroders continues to manage the portfolio beyond the second anniversary of its appointment, a management fee of 1% of NAV per annum shall be payable.
In addition, the Company will pay Schroders a performance fee based on sales of properties in the portfolio and shareholder returns achieved. The performance fee will be calculated on the following basis:
· on the completion of each property disposal, a fee equal to 0.25% of the gross sales value achieved; and
a conditional fee equal to 0.40% of the gross sales value achieved on completion of each property disposal prior to the second anniversary of the Schroders' appointment to be held in escrow and released on the earlier of (a) the second anniversary of the Schroders' appointment or (b) the final date upon which MEREIT returns capital to its shareholders, or (c) the date upon which MEREIT's shareholders receive consideration (whether cash or equivalent consideration, including shares) in respect of an offer, amalgamation or merger proposal by a third party offeror (the Payment Date). The payment of this fee is conditional upon the total shareholder returns (whether or not returned to shareholders as cash or equivalent consideration (including shares)) being 160 pence per share (this being £57.53 million of capital) (combining cash and remaining NAV) in the period from 25 October 2011 to the Payment Date (the Performance Hurdle). The Performance Hurdle will be increased at a rate of 5% per annum (compounded daily on a straight line basis) from 25 October 2011 to the Payment Date.
In the interim period to their appointment, Schroders shall conduct an operational and strategic review of the Company for which Schroders will be paid a transition fee at a rate of €25,000 per month up to the date of their appointment.
Under the Heads of Terms, it is proposed that the appointment of Schroders shall continue in force until the second anniversary of its appointment and may be extended by mutual consent of the parties (and thereafter subject to six months' written notice for termination by either party)
A further announcement is expected to be made in due course.
Cenkos Securities plc
Will Rogers Phone: +44 (0) 20 7397 1920
Dion Di Miceli Phone: +44 (0) 20 7397 1921
Praxis Fund Services Limited
Shona Darling Phone: +44(0) 1481 755 528
Schroders Property Investment Management Ltd
Duncan Owen Phone: +44 (0) 207 658 4954
This information is provided by RNS
The company news service from the London Stock Exchange
Datafeed and UK data supplied by NETbuilder and Interactive Data.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk!
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.