Sabana defends ESR deal valuation but Quarz says reasoning 'absurd'

Published Wed, Aug 5, 2020 · 09:50 PM

Singapore

THE manager of Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) has insisted that its proposed deal with ESR-Reit does not necessarily undervalue Sabana as it is a merger and not an asset sale. But activist fund Quarz Capital Management criticised this reasoning as "absurd".

Quarz was responding to a statement from Sabana on Wednesday explaining that because Sabana Reit and ESR were merging, unitholders would be able to stay invested in a "stronger, larger and more resilient enlarged Reit".

Sabana Reit's manager also pointed out in the statement that the Reit had consistently traded at a discount to its net asset value (NAV) in recent years.

While NAV "may be a pertinent metric in an asset sale", Sabana Reit's management said it is important to consider other factors in the context of a 100 per cent unit swap between two lis…