One of the biggest shareholders in AIM-listed Secure Income REIT will reduce the fee it charges the company as an adviser by more than £1m annually, in light of a large cash surplus the REIT is holding.
Secure Income REIT, whose assets include the Alton Towers theme park and Manchester Arena, is sitting on £158m in cash from the 2019 sale of a portfolio of eight hospitals.
The REIT has decided that the cash is “best retained… in order to provide flexibility”, it said in a stock exchange statement, “while the nature of Brexit is resolved and the management team continue their search to source value accretive deals”.
Prestbury, which owns a stake in the REIT and advises it, has suggested to its independent directors that it reduces its advisory fees to the level payable if that cash were returned to shareholders, arguing that “charging shareholders for holding such a significant amount of surplus cash would be inequitable”.
The REIT’s directors have accepted the offer, which will save it £1.2m annually based on the current cash level. The surplus cash will now be excluded from calculations of the REIT’s EPRA NAV.
Martin Moore, chairman of Secure Income REIT, said: “The management team is the company’s second largest shareholder and so is exceptionally closely aligned with all shareholders. They consider that they should not benefit from temporarily acting as managers of the company’s unusually high cash balance.”
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