Supermarket Income REIT has shifted the way it calculates the management fees it pays away from net asset value and towards market capitalisation.
The group will now pay its investment adviser Atrato Capital a percentage based on the market value of the business, starting at 0.95% for a market cap of up to £500m, with the percentage falling as the value of the business goes up.
The fee rate tops out at 0.4% should Supermarket Income REIT’s market capitalisation top £2bn.
The firm currently has a market cap of just less than £875m.
Nick Hewson, chair of Supermarket Income REIT, said: ”We have worked closely with the investment adviser to identify ways to deliver both material cost savings and even closer alignment with the interests of the company and its shareholders.
“Once documented, these initiatives are expected to enhance earnings and are an important step towards our goal of having one of the lowest EPRA cost ratios in the UK REIT sector.”
Marcus Phayre-Mudge, fund manager at TR Property Investment Trust, welcomed the move by Supermarket Income REIT and urged others to follow.
He said the change “proactively addressing the increasing demand for external management contracts that better align with shareholder interests”.
“Since shareholders benefit from share price total returns rather than NAV-based returns, it’s only right that the manager’s compensation is tied to the same metric,” said Phayre-Mudge. “It is great to see SUPR’s board and its manager, Atrato, work together to create a fairer arrangement for shareholders. We urge other boards to review their own investment adviser contracts and, where needed, adopt similar improvements.”
Photo by Jochen Tack/imageBROKER/Shutterstock
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