Greenwin Property Management Inc., the current manager, will continue to provide back-office (accounting and administrative) services to ResREIT at a reduced annual fee of 1.3% of gross receipts for a five-year period, however; the agreement can be cancelled after nine months with 90 days' written notice, at no cost to ResREIT.
ResREIT controls 10,890 residential units in five major Canadian cities. The company says it will be hiring the managers currently working on its portfolio and will assume direct control of all site staff including rental agents, site administrators and superintendents -- the individuals that have been responsible for the day-to-day operations of its properties.
ResREIT president/CEO Dino Chiesa says the internalization will provide "immediate and long-term cost savings and fully aligns our front-line people with the interests of ResREIT unit holders." ResREIT CFO Maurice Kagan says he expects the company's recurring distributable income in 2004 to increase by $0.02- to $0.03 per unit.
"We will have to staff up in some areas such as IT and administration, but will not incur any major costs such as relocating to new premises and instituting a new computer system," says Kagan. "Our managers will be operating out of their respective sites to be closer to their operations."
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