Sabana Reit to hold EGM on Aug 4 to vote on manager removal
THE extraordinary general meeting (EGM) to vote on the removal of the manager of Sabana Industrial Real Estate Investment Trust (Sabana Reit) will take place on Aug 4.
The meeting, slated to run from 2 pm to 4 pm, will be at Hope@New Tech Park, the Reit manager said on Wednesday (Jun 28).
Activist investor Quarz Capital requisitioned the EGM to pass a first resolution to remove Sabana Reit’s current manager as soon as practicable.
Another resolution will effect the internalisation of the Reit management function by incorporating a subsidiary wholly owned by the trustee, and appointing this subsidiary to act as the manager of Sabana Reit.
In a separate letter on Wednesday, Quarz Capital reiterated that the two EGM resolutions are independent and standalone resolutions.
“They are also to be tabled in the order as set out in our requisition notice – namely Resolution 1 for the removal of the external manager first, and then Resolution 2 to direct the Sabana Reit trustee to effect the internalisation,” it said.
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In an open letter dated Jun 25, ESR Group, which owns the Reit manager, had called for the resolution on internalisation to be voted on before unitholders vote on the resolution to remove the current manager.
Quarz said in a previous letter that replacing the ESR Group-owned external manager with an internal one would bring benefits to unitholders through cost savings.
It would also resolve potential corporate governance flaws, and could result in higher distribution per unit and unit price to Sabana unitholders in the future, it said.
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The move has drawn pushback from both the manager and ESR Group, which have warned unitholders that following through on Quarz’s proposal could destroy the value of their investment.
ESR Group, in its Jun 25 open letter, noted that a change in manager could also lead to a breach in loan covenants as Sabana Reit entered into facilities or financing agreements containing restrictions on a change of manager – including its stepping down.
In response to this argument, Quarz said in an e-mail to The Business Times that some Singapore-listed Reits have seen their managers change hands with no publicly announced difficulties from lenders.
Quarz also noted that external managers are under the regulatory purview of the Monetary Authority of Singapore, and that the existing manager would act as a caretaker until the new manager is fully licensed and ready to take over the management of the Reit.
Sabana Reit’s units on Wednesday closed unchanged at S$0.435.
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