ING UK Real Estate Income Trust Limited (IRET)
25 August 2009
IRET RENEGOTIATES MANAGEMENT FEES
ING UK Real Estate Income Trust Ltd ("IRET" / "the Company"), a Guernsey registered closed-ended investment company, announces that it has agreed terms in respect of changes to the management fee structure with ING Real Estate Investment Management UK Limited (the "Investment Manager"). The current arrangements, based on a sliding scale, currently 90 basis points of Gross Assets have been changed to a Net Asset Value basis with effect from 1 July 2009.
The agreed revised terms are as follows:
The management fees will be payable quarterly in arrears and will be equal to one quarter of 145 basis points of the Net Asset Value
A performance fee will be calculated and payable annually (as at 31 Dec), calculated on the basis on which the property assets have outperformed the IPD All Quarterly and Monthly Valued Funds Benchmark on a rolling three year basis. The percentage outperformance will be multiplied to the base management fee to calculate the performance element. The performance fee in the first year will be determined by reference to the entire calendar year (but calculated at 50%), and for the second year on the average of the first and second year results. In the event that the Investment Management Agreement is terminated in a quarter other than ending on 31 December in any year, the performance fee will be calculated on the average of the two preceding years and annualised in the year that contract is terminated and a pro rata adjustment made in that relevant year.
Administration services will no longer be paid for by the Investment Manager
The notice period will remain the same meaning that the contract may be determined by either party on not less than 12 months notice in writing.
The fees payable under the proposed arrangements will not exceed the existing fee arrangements, as set out in the Investment Management Agreement dated 3 October 2005.
Based on the June 2009 Net Asset Value, the revised arrangement will lead to a reduction in the management fee of approximately 30% (or £260,000 over the quarter), prior to the payment of any performance element.
A supplemental agreement to reflect the revised terms will be entered into by the Company and the Investment Manager shortly and the Company will make a further announcement in due course.
Chairman Nicholas Thompson commented:
"The Board is pleased to have reached this arrangement in respect of management fees which provides alignment with shareholders' interests, offering both an NAV base element and a relative market outperformance fee. In an environment when cashflow is very important the proposal has been structured in such a way that the total fee, including any performance related element, is capped to ensure the fees do not undermine the dividend cover of IRET."
For further information:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
St Peter Port
Tel: 01481 745480
Fax: 01481 745085
ING Real Estate Investment Management (UK) Limited
Helen Stott, 020 7767 5648, email@example.com
Dido Laurimore/Laurence Jones, 020 7831 3113