This article is from the Australian Property Journal archive
FED up investors in 16 Austgrowth property trusts are taking a stand and seeking to replace the current manager with CYRE Trilogy.
Investors in 10 single-asset property syndicates and six investment trusts valued at more than $130 million have called meetings.
All these trusts were part of the original Austgrowth trusts portfolio and are currently managed by the Brisbane-based property group Australian Property Growth Fund.
The 10 single-asset funds own commercial, retail or industrial properties across Victoria, New South Wales and Queensland.
Investors in each trust (amounting to significantly more than the 5% of units needed to call each meeting) approached CYRE Trilogy and have given their approval to CYRE Trilogy to call the meetings on their behalf which will be held in Sydney on 29 April. The CYRE Trilogy partnership will manage the assets of the syndicates and trusts and Trilogy will also act as Responsible Entity.
Trilogy Capital chairman Rodger Bacon said the property funds management industry has been undergoing changes with under-performing managers finding they are being increasingly challenged.
CYRE Trilogy is a joint venture between CYRE, principal Peter Arnold was an original founder of Austgrowth, and Trilogy Funds Management whose board and executives have extensive experience in property funds management.
“The CYRE Trilogy partnership brings together highly regarded expertise in property management, as well as a strong commitment to sound corporate governance principles, which combined will give the unitholders in these funds a better opportunity to maximise the return on their investment,” Bacon said.
According to Arnold, investors have been unhappy for some time with the lack of active management by APGF and it came to a head with the recent merger proposal.
“These investors have advised CYRE Trilogy that they want to sever all ties with the current manager after all of the Austgrowth trusts involved in the merger meeting overwhelmingly rejected APGF’s proposal to merge their single-asset funds into a mixed open ended fund, a move directly opposed to the principal reason why they were originally set up – to create single-asset funds with a set timetable and strategy for the asset acquisition, on-going management and then sale.
“Investors in these funds were horrified with APGF’s merger proposal. The proposal was at total odds to the original investment parameters of the syndicate structures and Investors were very annoyed at this proposal and the substantial costs which have been passed onto the Investors in those syndicates that were affected,” he added.
Arnold said the investors deliberately invested in single-asset property trusts, so they were rightly angry to discover they were facing the prospect of having their assets locked away into an open ended fund which contained additional layers of fees with no clear exit strategy and mixed in with other funds in what can only be called an unholy alliance.
“What compounded their anger is that some of these other funds were underperforming, and some were highly geared by comparison and the negative financial effects it could have on their investment.
“I agreed to assist these investors on a pro bono basis, and they have now approached the CYRE Trilogy partnership to take over the management because the failed and costly proposal to absorb their funds in a merged entity destroyed all confidence they might have had in APGF,” he continued.
Arnold said Trilogy is experienced in such changeovers in the wake of its joint venture with Balmain Trilogy replaced the failed City Pacific as manager of the City Pacific First Mortgage Fund.
And CYRE Trilogy will meet all such costs to facilitate the changeover.
“We also understand some of these funds are close to maturity. We would still urge investors to vote for the management change as there is no cost to them and we are confident that our focus, strong asset knowledge and ability to improve values should maximise the return on the sale of their assets.” he concluded.
Australian Property Journal
