MACQUARIE Real Estate founder Bill Moss is questioning the fee-charging regime of listed property fund managers as he immerses himself in the battle for control of the Charter Hall Office REIT.
Mr Moss, who now chairs the company he founded, Moss Capital, argues property fund managers should have cut fees more than they have since the global financial crisis, given the poor performance of the listed property trust sector and rationalisation in the industry.
“There is a real question as to whether fees by fund managers are too expensive,” he said.
Mr Moss is proposing to cut the base management fee for the Charter Hall Office REIT to 30 basis points from an average of 41 if his company is voted as the new manager at a shareholder meeting next month. Three activist hedge funds on Charter Hall Office REIT’s register hold 19 per cent of the company and are unhappy with the trust’s current management.
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The Orange Capital-led trio have called a meeting for shareholders to vote on whether to replace Charter Hall as the trust’s manager with Moss Capital Funds Management and Fortius Funds Management.
The Charter Hall Office REIT was previously known as the Macquarie Office Trust before Charter Hall bought the management rights from Macquarie early last year.
It was within a stable of listed real-estate trusts founded under Mr Moss’s leadership during his 23-year reign at Macquarie, where he built a $23bn real-estate platform.
At the peak of the market, the Macquarie Office Trust, as it was then known, saw its shareprice sail over $16.
However, during the GFC, shareholders punished the trust for its rapid expansion, large debt levels and US exposure, and shares slumped to less than $2.
But Mr Moss, who claims he has a “huge advantage” should his company take control of Charter Hall Office REIT, given his historic knowledge of the trust, maintains the strategy for the company executed while he was at Macquarie was at the time what shareholders wanted.
“If you stood there in 2004 and 2005, the unitholders would have said we will bring Babcock and Brown in because they will gear it,” Mr Moss said.
“Ultimately, a fund manger, reflects what the unitholders want. A fund manager is somebody who doesn’t have a right.”
If he remained at the bank after March 2007, he said he would have wanted to spin the foreign assets of the trust, and other offshore properties that had been purchased under the Macquarie banner, into separate vehicles.
“I thought they should have spun off their assets at an earlier stage into seperate funds,” he said. “They should have had a US asset fund and an Australia fund.”