Argosy Property Trust's institutional investors are questioning an appraisal report which backs a $20 million deal to bring the management of the trust's property portfolio in house.
A report by Grant Samuel says the deal is cheaper and easier than rival proposals.
The report says the $20 million payment to end OnePath's management of the properties is in the best interest of unit holders, as the price is within the valuation range $19.7 - $23.7 million.
Institutional unitholders with a 10% stake in Argosy have been unhappy with the company's performance, and the price to end OnePath's management of its portfolio.
BT Funds portfolio manager Matt Goodson says the new price tag is far better than the $32.5 million initially proposed, but he still has questions about the merits of the deal.
He says Argosy already has debt on its balance sheet and it will now have to pay some $20 million for these rights which means they will have to sell property to fund that.
Mr Goodson says when the earnings that would be lost from selling that property are taken into account, it becomes less clear that this is a good deal for unit holders on straight earnings grounds.
ACC's investment manager, Nicholas Bagnall, says he's a little disappointed in the Grant Samuel report, and he disagrees with its conclusion and the cost is still too high at $20 million.
He says an alternative proposal is that the trustee looks at whether it would be in the interests of unit holders to remove the manager.
Mr Bagnall says he's also concerned the report doesn't include Grant Samuel's previous advice to Argosy's independent directors.
Meanwhile, DNZ Property Fund has rejected Grant Samuels' report, and especially the assessment of its own merger proposal.
