Sabana Reit unitholders urge EGM requisitionists to respect trust deed, court process

A FEW unitholders of Sabana Industrial Real Estate Investment Trust : M1GU 0% (Sabana Reit) have expressed concerns about Quarz Capital and four other unitholders who are requisitioning a third extraordinary general meeting (EGM). 

In a letter posted by the Reit to the bourse on Thursday (Apr 11), a unitholder named Chan Wai Kheong called on the requisitionists of the EGM to respect certain details that have been set out in the trust deed. 

Chan was a former independent non-executive director of Sabana Reit who was appointed to the board in June 2021. In April the following year, unitholders voted not to endorse his appointment at an annual general meeting.

Chan also asked that the court process – seeing as Sabana Reit’s trustee HSBC Institutional Trust Services has made an application to the court – be respected so that the issues in question “can be heard and decided in an orderly manner”. 

His views were supported in writing by five other unitholders whose details were redacted from the filing. 

To recap, Quarz Capital had in June last year requisitioned an EGM to remove Sabana Reit’s manager and to internalise the Reit’s management function by incorporating a subsidiary wholly owned by the trustee, and appointing such a subsidiary to act as the manager of Sabana Reit.

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Chan said in his letter that when he invests in a Reit, he looks to the trust deed to “set out the structure” of the investment vehicle, as well as to regulate the parties that can make investments for the Reit and decide what the Reit can invest in. 

“The structure and the set-up of the external manager are all clearly spelt out,” he said. 

He further noted that amendments to the trust deed must be approved by way of an extraordinary resolution, which requires at least 75 per cent of votes from unitholders.

Chan argued that as far as a Reit is concerned, unitholders should be able to do only what is permitted by the trust deed. 

“The trust deed and its provisions should reign supreme, and be amended only with the support of a supermajority. All investors signed on to it when they made the investment (in the Reit),” he said. 

He also said that when the internalisation resolution was passed on Aug 7, 2023, Sabana Reit’s unitholders had no further details on the trust deed amendments that were required. However, they had the reassurance that any amendments would be subject to their further approval. 

Chan said HSBC Institutional Trust Services is “seeking to act properly” and is looking to “put forward trust deed amendments for the unitholders to consider and approve”. 

“A few unitholders are trying to prevent this democratic process from running its course,” said Chan, in reference to the EGM requisitionists. 

“I feel it is time for these requisitionists to realise that they cannot be chipping away at the proper governance structure of the Reit and passing numerous ordinary resolutions to effect the change to an internal model,” he added. 

Units of Sabana Reit gained 2.8 per cent or S$0.01 to close at S$0.37 on Thursday.