Unit holders expected to vote in favour of Charter Hall in REIT battle

Unit holders are expected to vote against a management takeover of the Charter Hall A-REIT when they gather on Wednesday (July 27) in Sydney.

The vote will be held at 10am at the Grand Ballroom of Sheraton on the Park on Elizabeth Street, Sydney.

Hedge fund Orange Capital is proposing a resolution that Moss Capital Funds replace the existing Charter Hall Office management team as the responsible entity of listed trust.

Orange leads a consortium of hedge funds that collectively hold 20% of shares in the A-REIT.

Charter Hall has already written to its unit holders urging them to vote against the resolution.

It rejects an assertion by Orange Capital that the board of Charter Hall Office management has an inherent conflict of interest and is incentivised to favour the interests of Charter Hall and not make decisions that are in the best interests of unit holders.

the hedge funds are seeking a management takeover so they can sell off the assets held by the fund and cash in on their investment.

In a letter to unit holders, Roger Davis, chairman of Charter Hall Office REIT, says the current management strategy is to “drive earnings growth and reduce the discount between the trusts stated net tangible asset backing and the trading price of its units”.

A vote against the resolution is unlikely to deter the hedge funds, with the AFR reporting that they may shop out their 20% stake to a hostile investor.

Orange Capital has been calling for a management change since the start of the year.

Over this time shares in the REIT have been trading strongly and have risen from around $2.90 in January to around $3.40 currently, though still at a substantial discount to its net tangible asset backing of $3.93 per share.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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