Property for Industry Ltd shareholders voted 94.4% in favour yesterday of paying $42 million to internalise the NZX-listed company’s management.
The same management team will stay in place, making some wonder why the transaction was needed at all.
But deputy chair Anthony Beverley said benefits included the control on expenses, dealing with conflicts and strategic benefits. He said the return to shareholders would from the investment would flow through reduced expenses and higher profits.
NZ Shareholders Association chair John Hawkins told the PFI meeting the association had seen lower numbers than the 6.5% accretion to shareholders that the independent report by Northington Partners ascribed to the internalisation, but all the other predictions were still accretive.
And then he added: “I am confident that if shareholders reject this deal the management contract will be sold to a third party – that’s from some of the parties we have spoken to.”
And that’s the crux of the internalisation. PFI had an opportunity to control the future of its management, whereas sale of the management contract to a third party could have led to a far different future.
There were some quibbles that owners of the present manager, PFIM Ltd, would switch to internal contracts yet would still be allowed to conduct other business from the company office, but Mr Beverley said the external contract allowed that and the new contract would require them to give PFI priority.
The vote was held at PFI’s annual meeting, where the operational highlight was a presentation by general manager Simon Woodhams on the returns the company had achieved from its $28.5 million acquisition of the Sistema Plastics Ltd portfolio of 5 Penrose properties in 2015.
Sistema moved last year to new premises at Ihumatao, near Auckland Airport, after a period leasing back its Penrose premises. PFI has signed long-term leases on 3 of the Penrose buildings, sold one and has the fifth building still vacant.
The sale of 65 Hugo Johnston Drive to Crown Equipment Ltd for $14.25 million, up from PFI’s August 2015 acquisition price of $11.01 million, settled on Monday.
29 May 2017: Northington sees big gain for PFI from internalisation
24 May 2017: IRD makes tax ruling relating to PFI internalisation
1 May 2017: PFI sells one & leases 3 of 5-property Penrose portfolio
3 April 2017: PFI proposes internal management after 6 years of external
Attribution: Annual meeting, company releases.