ACTIVIST investor Quarz Capital on Tuesday (Feb 21) issued an open letter asking the management and board of Sabana Industrial Reit : M1GU 0% (Sabana Reit) not to “waste unitholders’ monies” by appointing an independent financial adviser (IFA) to evaluate the partial offer from Volare Group.

Quarz noted that Volare’s voluntary conditional offer to acquire an additional 10 per cent of Sabana Reit units at S$0.465 per unit is more than 50 per cent above a previous offer that the directors had recommended as “fair and reasonable”.

In 2020, the managers of Sabana Reit and ESR-Logos Reit : J91U 0% (then known as ESR Reit), had proposed a merger that valued units of Sabana Reit at an implied price of S$0.31 apiece, Quarz said. This is based on ESR-Logos Reit’s closing price of S$0.33 on Feb 20.

“The need to hire an IFA is highly questionable as it was just two years ago that the Reit manager spent more than S$2.1 million of unitholder’s capital – or more than 15 per cent of half-yearly distribution per unit (DPU) – with the directors recommending what we consider a low ball and value destructive merger offer,” Quarz said.

Under the Takeover Code, there is no requirement for the directors to obtain competent independent advice if a partial offer does not result in the offeror and its concert parties holding 30 per cent or more in the offeree.

Volare held 5.4 per cent of issued units in Sabana Reit before its offer to acquire another 10 per cent of the real estate investment trust (Reit).

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Quarz noted that Volare’s partial offer of S$0.465 per unit is near the highest price that Sabana Reit units had traded at in the last five years.

“We would be very surprised to see a truly independent board deem the current offer to be ‘unfair and/or unreasonable’ after the last offer,” Quarz said.

Asked by The Business Times if Quarz would accept Volare’s partial offer, head of research Havard Chi would only say that it finds the offer “attractive”.

Units of Sabana Reit closed 1.2 per cent or S$0.005 higher at S$0.425 on Tuesday, before the open letter was issued.