16 December 2010
ING UK Real Estate Income Trust Limited
('IRET'/ or the 'Company')
NEW MANAGEMENT ARRANGEMENTS
ING UK Real Estate Income Trust Limited, a closed-ended, Guernsey registered investment company, announces today that the Board has decided to internalise its investment management and has given notice to terminate its management agreement with ING UK Real Estate Investment Management (UK) Limited ('ING REIM'/ or the 'Manager').
· Decision to internalise the investment management function
· Notice has been served on ING REIM terminating their contract to manage the portfolio with effect from 31 December 2011
· Creation of a new wholly owned investment management subsidiary, to replace ING REIM
· Michael Morris, the current Fund Manager who has been involved since launch, and who is a senior director of ING REIM the Company's investment manager has agreed that he will oversee the implementation of the Board's internalisation plan to ensure continuity in the management of the Company's assets. He will be appointed Chief Executive of the Company's wholly owned investment management subsidiary once it has been established
· Post internalisation, the Company will remain domiciled in Guernsey thus retaining its tax efficient status
· The Company's strategy will continue to focus on the active management of the Company's GBP 422.6 million portfolio (30 September 2010) which generated annualised rental income of GBP 31.3 million as of 30 September 2010
The Board of IRET has been very satisfied with the performance of ING REIM and is particularly pleased by the completion of two more recent initiatives which Michael led, namely restructuring the Company's securitised debt in 2009 and the acquisition of Rugby Estates Investment Trust, earlier this year.
However, it was announced in mid 2010 by ING Group that it was to undertake a strategic review of the ING REIM business and that advisors had been appointed to manage this process. Although there is still no resolution as to what the final outcome will be for the ING REIM business, the Board believes it is in the best interests of IRET's shareholders to progress plans to internalise the management of the business and remove potential uncertainties over any future corporate activity surrounding the Manager. Furthermore, the internalisation is expected to deliver a number of other potential benefits to the Company, including:
· An aligned management team structure focussed solely on the assets of the Company
· A significant cost saving over the short to medium term, anticipated to be in the region of GBP 400,000 per annum which will further enhance the Company's dividend cover.
· Attracting a wider group of investors than it does currently as many major institutional investors will only invest in internally managed funds/companies
· To achieve one of the most efficient cost bases in the Guernsey registered real estate investment company sector.
Commenting, Nick Thompson, Chairman of the Company, said:
"The new arrangements set out in today's announcement are structured to provide stability for the Company and ensure that it is best placed to continue to build shareholder value over time.
"Since ING announced its strategic review in 2010, we have considered a number of options and the conclusion we have reached is that the most appropriate course of action is to focus on the management of our existing portfolio by internalising the investment management team whilst continuing to manage our balance sheet and our cash resources to deliver the best value for Shareholders.
"We have been happy with the performance of ING REIM and the management team led by Michael Morris, and are pleased that Michael has agreed to project manage the internalisation process and subsequently become Chief Executive of the management business. This will ensure the Company continues to benefit from his in depth knowledge of the assets and his experience of managing the Company's financing structure.
"Given current market conditions, we remain confident that the portfolio will continue to deliver a high quality income return and believe that the internalised management structure will ensure that opportunities continue to be seized to extract value through asset management, supporting capital growth over the medium to long term.
"We will provide further updates to shareholders as appropriate as the internalisation process progresses."
For further information:
ING UK Real Estate Income Trust Limited c/o Financial Dynamics
Nicholas Thompson Tel: 020 7831 3113
Northern Trust International Fund Administration
Services (Guernsey) Limited Tel: 01481 745529
Financial Dynamics Tel: 020 7831 3113
JPMorgan Cazenove Tel : 020 7588 2828