AMP Capital has ended its management agreement with listed New Zealand real estate investment trust, Precinct Properties New Zealand Limited, a move which will allow Precinct to internalise management for a one-off payment of NZ215 million ($197 million) for 100% of the management interests.
AMP Capital, which managed Precinct since its listing in 1997 via its 50% interest in the management company AMP Haumi Management Limited (AHML), said it had assessed that the internalisation of these management rights offered the strongest value to both Precinct and AHML as well as representing a natural evolution for the management arrangements for Precinct, which had become an increasingly standalone business.
The transaction would be estimated to deliver approximately $80 million profit subject to foreign currency and other adjustments for AMP Capital’s 50% share of the payment, which would be subsequently recognised in the AMP 1H21 financial results, and be recorded as a one-off gain outside of AMP Capital’s operating results.
At the same time, AMP Capital would cease receiving Precinct management fees post implementation, the impact of which is not material to AMP Capital’s ongoing earnings, the firm said.
Also, the management rights of Precinct were excluded from the proposed transaction between AMP and Ares Management Corporation for AMP Capital’s private markets businesses
“Under AHML’s management, Precinct has grown and optimised its portfolio, including successful delivery of more than NZ$1.5 billion in developments, and delivered strong returns for Precinct’s shareholders, as well as for AHML’s owners – AMP Capital and a wholly-owned subsidiary of Abu Dhabi Investment Authority,” AMP Capital said in the announcement made to the Australian Securities Exchange (ASX).