ESR Group hits back at Quarz, asks if push for internalisation vote is in unitholders’ best interests
THE sponsor of Sabana Industrial Real Estate Investment Trust (Sabana Reit) on Thursday (Jul 6) shot back at an open letter from activist investor Quarz Capital, which had sought support from the authorities to ensure fair conduct of an upcoming extraordinary general meeting (EGM).
The EGM involves two resolutions. The first is for the removal of Reit manager Sabana Real Estate Investment Management (SREIM), while the second concerns the internalisation of the Reit management function of Sabana Reit.
On Tuesday, Quarz alleged that ESR Group, the sponsor of Sabana Reit and the owner of SREIM, uses “complex arguments to potentially misinterpret unitholders’ intentions”. It also claimed that ESR Group had reordered the resolutions by placing the second resolution for voting first, and making the first resolution conditional upon the second resolution’s vote outcome.
“This is despite unitholders having repeatedly reiterated that Ordinary Resolution 1 stands first in line to remove the current external manager,” Quarz had said, adding there was “legal precedence” that the first resolution is independent and comes first.
In response, ESR Group said Quarz’s push for a vote on internalisation without first securing the in-principle consent of lenders to continue with current financing arrangements, or ensuring that standby facilities are in place, is “irresponsible and reckless”.
“It speaks volumes about Quarz’s lack of operational knowledge of the Singapore Reit market,” said ESR Group. “We ask the Sabana manager to consider whether allowing a vote to proceed in these circumstances is truly in the best interests of the unitholders, and to exercise their discretion judiciously.”
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ESR Group added that it “would not be constructive to Sabana Reit and to the interests of unitholders for there to be prolonged public discourse on this issue”.
“Quarz has persistently refused to engage substantively with any of our concerns and has instead resorted to false and misleading statements to bolster their call for internalisation,” ESR Group said.
“We call on the Sabana manager to take appropriate actions to resolve this dispute in a conclusive manner without further delay, so as to safeguard the interests of Sabana Reit’s unitholders.”
Units of Sabana Reit closed flat at S$0.425 on Thursday.
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