Wednesday, October 21 2008:
The vote follows the announcement last month that ReCap was likely to acquire the management of three funds from Mariner Financial; being the Mariner American Property Income Trust (ASX: MRA); Mariner Infrastructure Trust No. 1 (MIT 1 Sydney Opera House Car Park); and Mariner Property Trust No. 2 (MPT 2 Millers Self Storage, Moore Park).
The three funds have approximately 7,500 Australian based institutional and retail investors and more than $550 million under management.
For ReCap to be installed, MRA requires 50 per cent plus one of the votes in favour from those present in the room or by proxy, while MIT 1 and MPT 2 require 50 per cent plus one of total unitholders.
ReCap’s Chief Executive Officer Andrew Saunders said the acquisition of the management of the three trusts provides ReCap with some compelling business synergies.
“Each of the trusts has high quality, stable incoming producing assets and their investor client base is a valuable addition to ReCap. The investment also ensures our overall business becomes scale efficient in terms of resources,” said Mr Saunders.
“Additionally, the acquisition grows our total assets under management to $650 million and boosts our investment base to 9500 investors, presenting opportunities for significant future growth,” he added.
“Our plan is to utilise our experience in the United States and Australian property and financial markets to deliver improved investment performance and grow our relationship with these investors,” said Mr Saunders.
Having been involved in the establishment of Mariner’s US Trust in 2005 ReCap has the advantage of familiarity with the Trust’s properties, the underlying market fundamentals as well as the US asset management team.
“Having now completed due diligence we believe the financial and asset management of each of these trusts can be enhanced. We already have the
operating infrastructure to achieve this through existing in-house capabilities or outsourcing arrangements,” said Mr Saunders.
The purchase price is $2.5 million or 0.6 per cent of funds under management. A comparable deal to this was in the early 1990’s recession when Stockland acquired the AMP Diversity Property Trust for 2.1 per cent of FUM. More recently, Becton paid 9.4 percent of FUM when it purchased the Lachlan Property Group in December 2007.
Mr Saunders said the price paid was realistic in the current market environment and that he expects a number of similarly priced transactions to occur as the real estate funds management industry consolidates.