The squeeze on the fees being earned by property fund managersis amply demonstrated by looking at the commendably detailed results from theING 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 thisclose relationship has not prevented the Trustees of the fund negotiating a bigreduction in fees. Instead of getting0.9% of the gross assets, the manager now gets 1.45% of the net assets plus aperformance fee. But they don’t have to pay administrative expenses – whatever theyare.
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. Thisis no doubt the case. But that percentage drop is based on a June 2009valuation of £357m for the gross assets.
In June 2008 the assets were valued at£536m….do the maths.