REG - Macau Prop Opp Fund - Changes to Investment Management Agreement

Macau Property Opportunities FundAnnouncement

26/06/2024 12:00

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RNS Number : 9950T  Macau Property Opportunities Fund  26 June 2024

26 June 2024

Macau Property Opportunities Fund Limited

(the "Company")

 

Changes to Investment Management Agreement

As announced on 21 December 2023, following approval of the continuation of
the Company at the AGM, the Board has been in discussions with Sniper Capital
Limited, the Company's Investment Manager ("Sniper" or the "Manager"), to
reach agreement on the investment management fee arrangements going forwards.

 

During the course of 2023 as Macau transitioned away from the strict COVID-19
restrictions imposed by the Chinese government, the economy gained momentum,
driven by strong gaming revenues and increased visitor numbers. Despite this
broadly positive backdrop, the property market - especially the higher-end
luxury segment - was slower to respond as favourably as other areas of the
economy, as a degree of caution remained. Accordingly, while progress with
disposals was made during the year, the Board deemed it necessary to extend
the management arrangements with Sniper whilst repositioning the fees payable
to incentivise the Manager to achieve substantial sales during 2024. The
Board's view remains unchanged that the Manager's knowledge of the Company's
portfolio of assets and the Macau market is key to the successful delivery of
the divestment strategy.

 

The Board has agreed to amend the terms of the Investment Management Agreement
(the "Agreement") with the Manager, with effect (retrospectively) from 1
January 2024 as follows:

 

·      From 1 January 2024 and continuing during the remainder of
calendar year 2024, a management fee of US$100,000 per month will continue to
be payable to the Manager, with the realisation fee continuing on the same
terms as in 2023 and using the 30 September 2019 valuation basis for
determining the realisation fee hurdle.

·      Fees continue to be subject to an overall cap per annum set at
4.99% of the lower of market capitalisation and net asset value (the "Cap").
This is based on the market capitalisation on the day immediately prior to
signing the amendment agreement in respect of calendar year 2024 and will be
reset for each of the following years based on the market capitalisation or
net asset value (as applicable) at close of business on the last business day
of the previous calendar year. The Cap for 2024 is accordingly set at
US$1,439,816.

·      At the option of the Board, the monthly management fee may be
reduced to US$80,000 per month in respect of any monthly period beginning on
or after 1 January 2025, with one month's advance notice given to the Manager.

·      For calendar year 2025 and thereafter, the realisation fee hurdle
will be rebased by reference to the carrying value of the Company's portfolio
of assets as at 31 December 2024 (if available), but subject to divestment
hurdles being reached in 2024, in line with an agreed divestment plan.

·      For calendar year 2025 and thereafter, the realisation fee will
be 2.5% of the net realisation proceeds if the sale price achieved is greater
than 90% of the carrying value, with the removal of the 80% - 90% performance
hurdle band.

The Agreement (as amended) will continue throughout the divestment period, but
with effect from 1 January 2025, the notice period to terminate the Agreement
by each party will be reduced to 3 months.

 

The Board considers the arrangements to be fair given the context of the
continued challenging property market seen during 2023. They are intended to
ensure that the Manager is able to continue to operate and remains
incentivised to deliver realisations on behalf of the Company and its
shareholders. The changes to the fee arrangements constitute a smaller related
party transaction under the Listing Rules, and the Company has obtained
written confirmation from its Sponsor that the terms are fair and reasonable
insofar as the Company's shareholders are concerned.

The Board would like to thank shareholders for their continued support and
patience with regard to the Company's realisation strategy, and recognition of
the inherent value in the Company's portfolio of assets.

 

 For further information:

 

Manager

Sniper Capital Limited

Group Communications

Tel: +853 2870 5151

Email: info@snipercapital.com

 

Corporate Broker

Liberum Capital

Darren Vickers

Tel: +44 20 3100 2222

 

Company Secretary & Administrator

Ocorian Administration (Guernsey) Limited

Kevin Smith

Tel: +44 14 8174 2742

 

--Ends--

About Macau Property Opportunities Fund

Premium listed on the London Stock Exchange, Macau Property Opportunities Fund
Limited is a closed-end investment company registered in Guernsey and is the
only quoted property fund dedicated to investing in Macau, the world's largest
gaming market and the only city in China where gaming is legalised.

Launched in 2006, the Company targets strategic property investment and
development opportunities in Macau. Its current portfolio comprises prime
residential property assets.

The Company is managed by Sniper Capital Limited, an Asia-based property
investment manager with an established track record in fund management and
investment advisory.

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