Reit funds traded on the stock exchange are expected to provide investors with a solid return over time. However, there is one factor that has benefited from huge rewards that has grown over the years, and that is the management companies of the REIT funds that make up their ventures. These receive management fees derived mainly from the volume of assets purchased by the fund as well as from its performance, payments which usually increase every year. In return, the management companies provide various services to the funds, from day-to-day management, through accounting services, legal advice, professional salaries and more.
Stock market fluctuations are rising, the interest rate environment knows ups and downs, but what seems to be a steady upward trend is the payment of remuneration to the managers of REIT funds traded on the Tel Aviv Stock Exchange. Assets for the portfolio they manage.
Seven REIT funds are currently traded on the stock exchange, most of which (five) operate in the field of investments in income-producing real estate and two more – Generation Capital andEaston, operate in the fields of infrastructure. An examination of the financial statements of these funds for 2022 shows an average jump of more than 20% in the rewards charged by the funds’ management companies, which reflects the growth in the state of their assets. The amount of the aggregate management fee in tradable REIT funds amounted to NIS 173 million last year – a sharp increase of close to 25% compared to 2020.
The oldest fund among the listed RIT funds is RIT 1, which was established in 2006 at the initiative of the Excellence Investment House, then by Roni Biram and Gil Deutsch, and was issued that year. The fund invests in income-producing real estate, including in central office buildings Commerce and also nursing hospitals. The benefits paid to the management company, which includes CEO Shmuel Said and chairman Dror Gad, amounted to almost NIS 35 million last year – an increase of about 12% compared to 2020.
It should be noted that the management company of the Reit 1 Fund bears the full cost of the salary of CEO Shmuel Side, and it also provides the Fund with the services of CFO and other VPs. The current management agreement was approved in September 2020 and is valid for two years, ie for another three months. .
A takeover attempt that revealed oil management fees
The Harit Sela Capital Fund also operates in the field of income-producing real estate and owns properties with characteristics similar to those of R.Nineteen 1. The fund whose management company is owned by, among others, chairman Shmuel Selvin, Eli Ben Hamo, Yitzhak Sela and IBI Investment House, underwent a hostile takeover attempt in the winter of 2020 by a real estate company that yields a structure, an attempt that failed but flooded the The fat management fees paid to the fund’s management company.
At the end of 2021, the management fee at Sela Capital amounted to NIS 26 million, a relatively moderate increase (7.7%), which seems to be one of the reasons why the management company decided that from the beginning of 2021, in the months when the control struggle took place. 9% until March of this year upon termination of the agreement.
At Generation Capital, the infrastructure investment fund led by Yozi Singer and Erez Balsha, payments to the management company last year amounted to almost NIS 40 million – a jump of 54% due in part to the rapid expansion of the fund’s assets.
The additional infrastructure fund on the Tel Aviv Stock Exchange, Kiston, was issued in June last year, and is currently in the process of the huge deal to acquire control of Egged at a value of NIS 4.8 billion. Kiston, founded by Roni Biram, Gil Deutsch and Navot Bar (CEO), paid 2021 Management fee of NIS 12.1 million, more than twice the amount paid in the previous year.
Magorit: Property growth has boosted management fees
Two other REIT funds, Azorim and Magorit, focus on rental housing. Reit Azorim’s management company is the construction giant Azorim itself, which provides management services under a contract signed on the eve of the IPO in February 2020. The management fee collected from the fund amounted to NIS 21.7 million in 2021, an amount similar to the amount collected in the previous year. In the case of the Magorit Fund, headed by the entrepreneur Erez Rosenbuch, there was a sharp increase of 31% in the management fees charged by the fund’s management company against the background of the sharp growth in its assets to NIS 23 million.
An income fund established in 2015 and managed by Ofer Abram (CEO), Sharon Shvafi (Chairman) and Itai Mel (Deputy Chairman), owns assets in the more classic areas of Harit funds, such as high-tech offices, commercial areas, logistics The industry recorded a management fee of NIS 16.5 million in 2021, which grew by 17% within a year.