SABANA Real Estate Investment Management has criticised activist investor Quarz Capital’s proposal for Sabana Industrial Real Estate Investment Trust : M1GU 0%(Sabana Reit) to use an internal manager instead.

The Reit manager also warned unit holders that following through on the proposal might destroy the value of their investment.

Sabana Real Estate Investment Management, the current manager of Sabana Reit, filed a 35-page document and a 26-slide presentation deck to the bourse on Thursday (Jun 22) to make its rebuttals. In these documents, it stated that there were “potential risks” to Quarz’s proposed resolutions to replace it with an internal manager.

Internalising the Reit manager was likely to cause great uncertainty to the Reit and potentially destroy value for unit holders, a slide in the presentation deck declared in capital letters.

Quarz’s requisition and its reasoning were “overly simplistic and lacked clarity” on how the proposals were to be implemented; it also did not offer a timeline for the move, said the Reit manager.

It added that the activist investor also had not flagged the inherent risks associated with its proposed resolutions; neither had it assured unit holders of the Reit’s continuity.

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Sabana Real Estate Investment Management also listed what it said were misleading or unsubstantiated claims by Quarz, including inaccuracies, financial projections and assumptions in the requisition notice.

The exchange started about two weeks ago, with Quarz’s request that the board of Sabana Reit convene an extraordinary general meeting to pass two resolutions.

The first was to remove Sabana Real Estate Investment Management as manager of Sabana Reit as soon as was practicable; the second sought to effect the internalisation of the Reit management function by incorporating a subsidiary wholly owned by the trustee, and appointing such a subsidiary to act as the manager of the Reit.

Quarz also wanted the trustee to “hire and appoint qualified candidates” as directors and staff of the internal manager, and to consider retaining Sabana Reit’s existing staff for the continuity of the Reit’s operations.

Internalisation of the manager would bring benefits to unit holders through cost savings once the external manager is removed, Quarz said in its letter.

Sabana Reit rose by 1.2 per cent to S$0.435 on Thursday, before the manager’s rebuttal was published.