Internos and Orchard St nab Invista REIM fund mandates

Internos seizes IERET mandate, while Orchard Street will run SJP funds

Internos Real Investors and Orchard Street Investment Management have won their bids to take over two of Invista REIM’s largest mandates. The board of Invista European Real Estate Trust (IERET) appointed Internos after consulting with shareholders including US hedge fund Ironsides Partners and investment manager Spearpoint.

Both have built up stakes in the £144.7m listed trust over the past few months and own more than 30% of IERET. As a result, the board decided to change IERET’s investment objective and appoint Internos with a mandate to sell the assets  over the next three years. Separately, fund manager
St James’s Place, advised by its investment consultant, has appointed Orchard Street as investment manager for £626m life and pensions fund SJP UK Property Fund, and the £184m SJP Authorised Property Unit Trust, in Invista REIM’s place.

Both clients cancelled their management agreements with Invista REIM earlier this year, after Invista’s 55% owner, Lloyds Bank, switched nearly half Invista’s £5.4bn funds under management to wholly owned investment arm Scottish Widows Investment Partnership, and after a proposed management buyout by Invista REIM failed.

The Invista Foundation Property Trust has also ended Invista REIM’s investment management agreement. On 11 July it said it hoped to announce soon an appointment offering “the best prospects of enhancing the company and portfolio value”. Invista REIM’s management, led by Duncan Owen, in partnership with Schroders, are said to be front-runners to be appointed by IFPT. Aberdeen PIM and Henderson Global Managers were also shortlisted.

IERET has been trading at around a 40% discount to its €144.7m March net asset value. At that date the trust had 43 properties valued at €509.5m, mainly in France and Germany,  €347.5m of debt and €37.7m of cash. There are also €29.7m of preference shares outstanding. Internos, run by Jos Short and Andrew Thornton, will receive a fee of 12.5% of cash returned to shareholders above €82.8m – IERET’s average market capitalisation in the month before its decision.

Internos, run by Jos Short and Andrew Thornton, will receive a fee of 12.5% of cash returned to shareholders above €82.8m – IERET’s average market capitalisation in the month before its decision. It will also be paid the greater of €1m annually or 1.25% of NAV attributable to the ordinary shareholders. The IERET and St James’s Place mandates are likely to be transferred by October; Invista said last October that it planned  to wind itself up within a year. IERET manager Tony Smedley is more likely to go with Owen than to Internos.

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