Hong Kong property

PAG reports Spring Reit manager to watchdog for ‘inaccuracies’ in circular to unit holders

‘Material inaccuracies’ may influence motion to replace Spring Asset Management

PUBLISHED : Thursday, 02 November, 2017, 10:59am
UPDATED : Thursday, 02 November, 2017, 11:12pm

PAG Real Estate, an investor in Spring Reit, has asked the Securities and Futures Commission to take action against the reit’s manager for presenting inaccurate information that could prevent unit holders from making a well-informed voting decision ahead of a motion to have the manager replaced.

The alternative investment management company owns about 12.4 per cent of the reit. In a letter submitted to the securities watchdog as well as the Stock Exchange of Hong Kong, PAG said the manager had made several false and misleading statements in a circular dated October 25.

“The letter submits that the [reit] manager has presented material inaccuracies, which are detrimental to the interest of Spring Reit unit holders, and which could prevent unit holders from making properly informed voting decisions at the extraordinary general meeting, and on whether to hold or sell units in Spring Reit,” PAG said in a statement on Wednesday.

It came a day after Toshihiro Toyoshima, the chairman of Spring Asset Management, the asset manager of Spring Reit, said the company had secured written confirmations of support from unit holders with more than 50 per cent of voting rights.

An extraordinary general meeting will be held on November 10 by Spring Reit to decide on whether it should replace Spring Asset Management, as has been proposed by PAG since August.

PAG said: “The manager did not disclose that at least 34 per cent of Sprint Reit’s units were in the hands of the manager and its friendly parties.”

RCF Fund, a unit of Mercuria Investment, which owns 90 per cent of Spring Asset Management, holds a 27.52 per cent stake in Spring Reit. Spring Asset Management itself has a 1.6 per cent stake, while its directors have a 0.17 per cent stake, according to PAG.

More than one-third of Mercuria’s revenue comes from the management fee from Spring Reit, which offers a handsome 62.3 per cent profit margin.

“It is, therefore, no surprise that they are saying they will use their units in Spring Reit to vote to lock themselves in as the manager,” said PAG.

A Spring Asset Management spokesperson said: “ We have long-term unit holders who are highly supportive of Spring Reit’s strategy and performance. We are a licensed manager and Spring Reit is subject to stringent regulatory requirements as a listed reit.

“There is no substance to allegations PAG has made and we deny all such allegations.”