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Neuberger Berman Real Estate Se Message Board

  • Python_71 Python_71 Feb 1, 2008 11:23 AM Flag

    What Is The Holdup?

    I was surprised that NRI and NRO shareholders did not approve the merger yet with a significant majority. Seems like a no-brainer to me.

    I already effectively own the merged fund since I own both in roughly equal amounts. However, it would be nice to only have to pay one commission for transactions and get higher monthly dividend income when NRI shares convert to NRO shares.

    With the same investment objectives, directors, and fund manager, there is no reason for NRO and NRI to be separate entities. Why pay more in fund expenses when you can save money and improve cash flow via consolidation? Technology makes the cost of absorbing the NRI portfolio into NRO insignificant (just another electronic stock entry for the NRO computer database). There really is no excuse for administrative expenses to rise much after the merger, resulting in approximately $3 million in instant annual savings or improved cash flow to support dividends. Additionally, management fees would drop as a percentage of total assets as the asset base rises significantly (further costs savings).

    Again, both funds have the same portfolio manager!!! Does anyone really expect the performance of both funds not to converge over time? The only real issue is whether you want your fund to operate more cost effectively to improve long term performance. How can anyone say no to that? Truly amazing that we need an extra 13 days to think about it.

 
NRO
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