Sabana Reit manager says going beyond 'business as usual' is outside its purview

ACTIVIST unitholders' calls for going beyond "business as usual" are outside the power or discretion of the manager board to fulfil, the manager of the Sabana Shari'ah-Compliant Industrial Real Estate Investment Trust (Sabana Reit) said in a Singapore Exchange filing on Tuesday night.

The Reit manager's "clarification announcement" was made in response to various issues raised via e-mail, letters and public releases by investment funds Quarz Capital Management and Black Crane Capital, which collectively hold about 13 per cent of the total units of Sabana Reit.

Quarz and Black Crane recently indicated that they did not intend to endorse the two independent directors who were appointed after December's failed merger attempt between Sabana Reit and ESR-Reit. The two directors resigned in response.

One of Quarz and Black Crane's demands is that the "S$2.7 million costs" of the failed merger be borne by the manager and not the Reit. In its Tuesday announcement, the Reit manager said that the next financial results release will show the actual costs and fees incurred in relation to the failed merger, which are "materially below the S$2.7 million earlier mentioned".

The manager said it was "willing and open to pre-consulting" with Quarz and Black Crane on replacement candidates for independent directors.

The funds had also called for the "valuation gap" between Sabana Reit unit prices and net asset value to be closed, by "exploring options beyond business as usual". But going beyond business as usual and looking at "unusual or strategic options" are outside the purview of the manager board, said the manager.

"Strategic options must be taken up as matters to be fully, frankly and properly discussed and worked out for a collective outcome among all unitholders at EGMs (extraordinary general meetings)."

The manager noted that the upcoming April annual general meeting will give unitholders the opportunity to vote on a scrip dividend plan, under which they can opt to receive distributions in units rather than cash, which "can add value".