The squeeze on the fees being earned by property fund managers is amply demonstrated by looking at the commendably detailed results from the ING UK Real Estate Investment Trust published this morning.
The Trust is managed by ING Real Estate Management, who parted company with their head of acquisitions, Nicholas Gill today. But this close relationship has not prevented the Trustees of the fund negotiating a big reduction in fees. Instead of getting 0.9% of the gross assets, the manager now gets 1.45% of the net assets plus a performance fee. But they don't have to pay administrative expenses - whatever they are.
This new deal translates into a 30% reduction - or just over £1m a year - prior to the payment of any performance fee says the Trust. This is no doubt the case. But that percentage drop is based on a June 2009 valuation of £357m for the gross assets.In June 2008 the assets were valued at £536m....do the maths.