David Kingston targets Chris Langford’s Newmark Capital Property REIT

Former Rothschild banker David Kingston has found a new target – ex-Hawthorn captain Chris Langford, and his Newmark Capital’s new listed property trust.

Newmark Capital joint managing directors Chris Langford, left, and Simon T. Morris. (r)

Former Rothschild banker David Kingston has found a new target – ex-Hawthorn captain Chris Langford, and his Newmark Capital’s new listed property trust.

Mr Kingston, who has sparred with fund managers from Rob Luciano to Geoff Wilson, last week requested the shareholder register of the Newmark Property REIT and listed a series of grievances about the trust’s high fees and falling share price.

In particular, the veteran banker is aggrieved that Mr Langford and his investment team have decided to pursue a $57m large format Brisbane property located in Underwood.

Newmark’s REIT was listed in December after the fund manager brought together several of its properties and purchased three Bunnings properties – with an end value of some $200m – to create a trust that would replicate the successes of BWP Trust. That ASX-listed vehicle owns some 73 sites, largely leased to Bunnings.

Since the end of December, shares in BWP have fallen 2.1 per cent. Those in the Newmark Property REIT have fallen more than 26.7 per cent in that period.

Mr Kingston told The Australian that Mr Langford had been “a great AFL player but (he) gets an F for fail at his first test in the listed arena”.

“Dropped by his investors down to reserve grade,” he said.

“The large value loss is ugly given most of the Newmark REIT properties are underpinned by the ever-reliable Bunnings.

“Chris and team had two options to use their debt capacity – a buyback at around 28 per cent discount to (net tangible assets) of $1.97, or a full-priced property acquisition,” Mr Kingston said. “The first generated no management fees, the second generated lots.”

“Chris chose the full-priced property acquisition and the increased management fees.

“That’s bad for … shareholder value. Teamwork won Chris and Hawthorn four premierships, but the REIT has been win/lose – the manager has extracted big fees but investors have been smacked.”

The Newmark trust last month announced it would buy back stapled securities, although it has yet to do so as of Monday.

“The process is proceeding in accordance with relevant laws and regulations,” said the fund’s manager, Ed Cruickshank.

“ASX listing regulations prohibit the purchase of securities during certain periods. Our buyback will proceed in line with ASX regulations,” he said.

Mr Cruickshank said he was “confident in the core investment thesis and objectives of (the REIT) and its ability to deliver on its investment strategy, underpinned by leading national retailers”.

“Newmark Property REIT remains on track to deliver on its distribution forecasts.

“Recent material external factors are impacting listed markets, particularly the REIT market, with consequential impacts on trading prices,” he added.

“Underwood is a high-quality property that is located on a significant land holding on the corner of two arterial roads in a sizeable catchment area and underpinned by leading national retailers,” Mr Cruickshank said.

“This combination of underlying real estate and tenancy mix will provide for a high-quality long-term investment.”

The property is tenanted by Officeworks, Supercheap Auto, and Sydney Tools. The purchase took the portfolio value to $620m, and headline gearing from 25.1 per cent to 36.5 per cent. It also reduced the proportion of the overall portfolio leased to Bunnings owner Wesfarmers from 80.3 per cent to 74.1 per cent.

“The addition of Underwood is consistent with (the REIT)’s strategy and complements the existing portfolio,” Mr Cruikshank said.

“It provides the diversification of geography and defensive and growing income profile that (the REIT) is seeking to provide its investors. We believe (it) will deliver long term income growth to investors, and has been positively endorsed by a number of them.”

Mr Kingston has pursued several listed investment companies trading below their NTA, including in 2020 the Australian Leaders Fund, managed by Watermark Funds Management. Similarly, he has agitated for the wind up or merger of two listed funds now operated by Regal Partners.