The takeover was confirmed in a unitholder meeting held in Sydney in early November and follows months of correspondence with shareholders of the LM Wholesale First Mortgage Income Fund.
The fund in question acts as a feeder into the LM First Mortgage Income Fund, a property fund which was fraozen due to the global financial crisis.
The LM First Mortgage Income Fund was closed to new investment and redemptions on 3 March 2009 with around AUS$608m of debt outstanding to 55 lenders. Since then, LM has been trying to sell the assets within the portfolio in order to bring down the debt and ultimately provide some return to investors.
Trilogy is also trying to persuade investors to vote in favour of it taking control of the LM First Mortgage Income Fund as well as the LM Currency Protected Australian Income Fund, although, according to a statement from LM released on the 1 November, Trilogy has “given up” on this strategy. All of the funds were sold exclusively through financial advisers and intermediaries and were accessed globally.
In a “letter of apology” written by LM Investment Management’s chief executive and founder Peter Drake, he apologises for the length of time the process of winding down the assets has taken and for the “anxiety and stress” caused by Trilogy’s attempts to take over management of the LM property funds.
However, Drake also points out that, despite it making the offensive ostensibly on the basis of LM charging excessive fees, Trilogy is now taking a 0.5% fee from investors in the LM Wholesale First Mortgage Income Fund where LM had previously not.