Pure Multi-Family REIT announced plans to internalize asset management, effective September 1, 2016. In the meantime, the Managing GP will continue to provide services to Pure Multi-Family under the Asset Management Agreement until August 31, 2016.
This decision stemmed from the company having recently reached a market capitalization of US $300,000,000. As such, the Pure Multi-Family’s directors determined that it would be beneficial to Pure Multi-Family and its unitholders to terminate the Asset Management Agreement and internalize those services. Since the establishment of Pure Multi-Family, Pure Multi-Family Management LP has been providing Pure Multi-Family with advisory, asset management, reporting, and administrative tasks.
No fee will be payable to the Managing GP as a result of the termination of the Asset Management Agreement. Effective September 1, 2016, Pure Multi-Family will enter into employment agreements with the existing officers and senior managers, who are currently employed by the Managing GP.
“We believe that Pure Multi-Family has provided our investors with a truly aligned management structure,” said Stephen Evans, CEO. “On Friday August 12, 2016, the “Determination Event” set out in the Limited Partnership Agreement occurred, as our total market capitalization has exceeded US$300 million for 10 consecutive trading days. As a result, the exchange ratio for the future conversion of Class B units of Pure Multi-Family to Class A Units has now been fixed at the equivalent of approximately 5 per cent of the pro forma ownership, representing 2,665,835 Class A Units.
“Since our IPO in July 2012, Management has not been remunerated in any manner other than through its investment and participation in the Class B Units. As a reminder to our unitholders, Pure Multi-Family does not permit external asset management or transaction fees to be paid to management. We have established a structure, through the issuance of our Class B Units, that is success driven, and a structure that we believe is respectful of our investor’s capital.
“As asset management will be internalized at no cost to Pure Multi-Family, management will remain committed to fully aligning our interests with those of our unitholders. Post-internalization, we anticipate that Pure Multi-Family will continue to have among the lowest general and administrative expenses percentages versus total revenue of our peer group.”