Summit Germany Limited Amendment to Portfolio Management Agreement (0819Z)
March 10 2017 - 2:00AM
UK Regulatory
TIDMSMTG
RNS Number : 0819Z
Summit Germany Limited
10 March 2017
Summit Germany Limited
("Summit" or the "Company")
Amendment to Portfolio Management Agreement
10 March 2017
Summit, the AIM-listed German commercial property investment
company, announces that the terms of the Portfolio Management
Agreement between the Company, other members of the Summit Group
and Summit Management Company S.A. ("SMC"), a company 100% owned by
Zohar Levy, Managing Director of the Company, have been amended
pursuant to an amendment agreement (the "PMA Amendment").
The Portfolio Management Agreement, amongst other things,
currently governs the provision of management services by SMC,
including a commitment by SMC to supply a Managing Director and a
Finance Director, to the Company and its subsidiaries (together,
the "Summit Group") and the fees received by SMC for such services
(a portion of which is allocable to the Managing Director).
PMA Amendment
The PMA Amendment, which has been approved by the Board on the
recommendation of the Company's Remuneration Committee, implements
three principal amendments to the fee payable to SMC, which are
described below.
The primary purpose of the PMA Amendment is to further
incentivise SMC to deliver exceptional returns on a sale or series
of sales of properties in the Summit Group. Notwithstanding this,
the Company's strategy remains unchanged, namely to acquire high
yielding commercial property assets in established locations and
maximise value via proactive asset management, including improving
occupancy rates or rezoning, which can lead to strong cash flows
and increasing capital growth for shareholders.
1. Inclusion of a new "Special Bonus"
SMC shall be entitled to receive a "Special Bonus" if, at any
time in the period commencing on 1 January 2017 and ending on the
date falling three years thereafter (i.e. 1 January 2020), there is
a qualifying sale or series of sales of any properties of the
Summit Group. A qualifying sale or series of sales is one, which
alone or in aggregate, results in the proceeds received by the
Summit Group, (net of any costs and expenses incurred in connection
with the relevant sale(s)) and less the value (as stated in the
Group's valuation as at 30 June 2016) of the properties sold, being
greater than EUR50 million (the whole of such amount being the
"Qualifying Amount"). The Special Bonus shall be an amount equal to
five per cent. of the Qualifying Amount and is subject to a total
aggregate cap of EUR10 million over the three year term.
2. Amendment to basis of calculation of existing Bonus
The existing annual bonus entitlement of SMC (the "Bonus")
remains capped at a maximum of EUR750,000 per annum. However, the
basis on which the Bonus amount is calculated has been amended so
that it is no longer based on the Company's Funds From Operations,
but by reference to the aggregate return to the shareholders of the
Company at the end of each accounting year, whether as a result of
dividends received and/or an increase in the net asset value of the
Company (excluding any increase due to revaluations) (the
"Return"). In the view of the Board, this amendment will provide
greater alignment of SMC's interests with those of the Company and
its shareholders. The Bonus will be calculated on a pro-rata basis
for any increase in the Return up to and including 5.5%.
In addition, in the first accounting year in which a Special
Bonus is payable, any Bonus payable in that same year shall be
deducted from the amount of the Special Bonus so payable.
3. Base fee
The base fee (being the monthly management fee) payable to SMC
remains EUR62,500 plus VAT per month. Going forward, the Portfolio
Management Agreement has been amended so that SMC is obliged to
provide the services of the Managing Director only and not the
services of the Finance Director. As has been the case since
November 2014, the Company intends to continue to engage its
Finance Director directly.
Related party transaction
For the purposes of AIM Rule 13, SMC is an "associate" of a
director (Zohar Levy) and entry into the PMA Amendment by the
Summit Group and SMC constitutes a related party transaction.
The independent directors of the Company (being the directors,
with the exception of Zohar Levy), having consulted with the
Company's nominated adviser, Liberum Capital Limited, consider that
the terms of the PMA Amendment are fair and reasonable insofar as
the Company's shareholders are concerned.
For further information please contact:
Summit Germany Limited Tel: +44 (0) 1481 700 300
Zohar Levy - Managing Director
Itay Barlev (Braun) - Finance Director
Non-Executive Chairman Tel: +44 (0) 20 7451 7050
Harry Hyman
Carey Group, Company Secretary Tel: +44 (0) 1481 700 300
Sara Bourne
Liberum Capital Limited, Nominated Adviser and Joint Broker Tel: +44 (0) 20 3100 2222
Chris Clarke / Jill Li
Cenkos Securities, Joint Broker Tel: +44 (0) 20 7397 8900
Ivonne Cantu
Russell Kerr / Selwyn Jones (Broking)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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