HSBC Institutional Trust Services – the trustee of Sabana Industrial Real Estate Investment Trust : M1GU 0% (Sabana Reit) – has filed a court application to seek a declaration that amendments to the trust deed are required to implement the resolutions approved at the extraordinary general meeting (EGM) on Aug 7, 2023.

Under the court application, the trustee is also requesting a declaration that its power to certify certain amendments to the trust deed is discretionary rather than obligatory.

In addition, the trustee is requesting the liberty to convene an EGM of the unitholders – in accordance with the requirements of the trust deed and the Code on Collective Investment Schemes (CIS Code) – to consider the proposed trust deed amendments.

It is also requesting for costs for the court application to be provided for, as well as further or other relief as the court deems fit.

On Aug 7 last year, unitholders of Sabana Reit voted in favour of internalisation. Two resolutions were passed – one to remove Sabana Real Estate Investment Management as the Reit’s manager, and the other to effect the internalisation of the Reit management function.

The trustee reiterated in a Nov 7 update that certain amendments to the trust deed are necessary to effect internalisation, and such amendments are subject to an extraordinary resolution of unitholders.

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But the Sabana Growth Internalisation Committee (SGIC) stated its disagreement with this in December, and later sent an open letter to regulatory authorities seeking guidance on the internalisation of the Reit’s manager.

In an update to unitholders on Tuesday (Jan 9), the trustee said that it had taken into account the “wide-ranging nature” of the proposed trust deed amendments, as well as its own views that “it cannot be said with certainty that the proposed trust deed amendments do not materially prejudice the interests of unitholders”.

As a result, it believes the proposed trust deed amendments should be subject to unitholders’ due consideration and approval by way of an extraordinary resolution at an EGM, to be convened in accordance with the trust deed and the CIS Code.

“The trustee would like to emphasise that this Order 32 Application is being made to help clarify necessary threshold issues and steps for the internalisation process and to ensure that the views of all unitholders are properly considered in an appropriate forum,” it said.

The trustee added that the court application will be carried out concurrently with all other work streams in parallel with the proposed summary of the work plan.

In view of activist investor Quarz Capital’s “contrary position”, the trustee said that it has added Quarz as a party to the court application so that the latter can put forward its views to the court for consideration.

It said that any other unitholder who wishes to be added as a party to the court application should consult their own legal advisers on making the necessary application to the court, and inform the trustee’s solicitors, Rajah & Tann.

The trustee will make the necessary announcements as and when there are further developments, including when the date of the hearing for the court application has been fixed.

The trustee also noted the requisition notice dated Dec 21, 2023, from the SGIC, which requested the manager to convene an EGM to consider certain resolutions.

Addressing this, the trustee stated that it would not be beneficial to the progress of the internalisation for an EGM to be convened, or to consider the requisitioned resolutions at this juncture.

This is because convening an EGM would “add additional work over and above” the current work, as some of the requisitioned resolutions will require clarifications and modifications, and may not be actionable as proposed.

In addition, the trustee pointed out that some of the requisitioned resolutions pertain to issues relating to the proposed trust deed amendments, which are the subject matter of the court application.

“Accordingly, it may not be meaningful for these requisitioned resolutions to be tabled to unitholders before the court provides guidance and clarity on the prayers sought in the Order 32 Application,” it said.

Units of Sabana Reit closed flat at S$0.40 on Tuesday, before the announcement.