Sabana Reit manager faces Syariah constraints

THE recent Sabana saga probably reflects growing attention being paid to Reit fee structures here against a backdrop of increasingly challenging economic conditions. One of the issues is the multi-level fees levied by the Sabana manager, but one is hard-pressed to fault the manager on this aspect alone as its fee structure is within industry norms.

The manager charges an annual base fee of 0.5 per cent, the same percentage as performance fee. It also levies one per cent for each acquisition and 0.5 per cent for divestment.

To top it off, a wholly-owned subsidiary of the manager charges the Reit for property and lease management. Base fee is computed on value of deposited property, while performance fee is based on net property income (NPI). Property valuation was a point of contention at Sabana's recent EGM and rightly so as property is in essence a "Level 2" or "Level 3"-type asset in accounting terminology and it also impacts, inter alia, base fee calculation.