Custodian REIT has announced amendments to the terms of its Investment Management Agreement (IMA) with its fund manager, Custodian Capital Limited (a subsidiary of Mattioli Woods plc). The amendments follow the expiry of the IMA’s initial three year term. Custodian REIT says that, in light of the positive performance of the Company since admission to trading on the London Stock Exchange in 2014, the Board has agreed a further three year term with 12 months’ notice to the Investment Manager’s ongoing engagement, from 1 June 2017.
New lower fees but all other key elements remain unchanged
Fees payable to the Investment Manager under the IMA have been amended to include:
- A step down in the property management fee from 0.75% to 0.65% of net asset value (“NAV”) applied to NAV in excess of £500 million; and
- A step down in the administrative fee from 0.125% to 0.08% of NAV applied to NAV between £200 million and £500 million and a further step down to 0.05% of NAV applied to NAV in excess of £500 million.
- Custodian REIT says that all other key terms of the IMA remain unchanged.
In shareholders best interests
The Board considers these amendments to the IMA to be in the best interests of the Company’s shareholders because:
- The administrative fee will fall immediately, increasing cover on target dividends for the year ending 31 March 2018;
- Further growth in NAV, particularly above £500 million, will further reduce the Company’s ongoing charges ratio and increase dividend capacity; and
- Another three year term provides the Investment Manager with security of tenure and allows further investment in the dedicated systems and people providing its services under the IMA.
Board delighted with performance since admission
David Hunter, Chairman of Custodian REIT, says that, “The Board has been delighted with the performance of the Investment Manager since Admission, particularly the timely deployment of new monies on high quality assets, securing the earnings required to fully cover target dividends. The revised IMA terms secure an immediate cost reduction for shareholders and will provide further economies of scale should NAV growth continue.”
About Custodian REIT
Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014. Its portfolio comprises properties predominantly let to what it describes as institutional grade tenants on long leases throughout the UK. It says that the portfolio is characterised by properties with individual values of less than £10 million at acquisition. The Company says that it offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund. By targeting sub £10 million lot size, regional properties, the Company says that it intends to provide investors with an attractive level of income with the potential for capital growth. Custodian Capital Limited is the discretionary investment manager of the Company.
Custodian REIT announces step down in management fee : CREI