Quarz, Black Crane again requisition Sabana Reit EGM over appointment of director

QUARZ Capital and Black Crane Capital have sent a requisition letter to the manager of Sabana Shari'ah Compliant Real Estate Investment Trust (Sabana Reit), asking to convene an extraordinary general meeting (EGM) to endorse the appointment of hedge fund founder Chan Wai Kheong as the Reit's independent non-executive director.

Quarz and Black Crane together hold more than 10 per cent of the total listed units of Sabana Reit M1GU : M1GU 0%.

In a joint letter to Sabana Reit manager on Monday, the pair called on Mr Chan to "put himself up for endorsement immediately".

Quarz and Black Crane said they are requisitioning the EGM for the endorsement of the new director to be conducted in a "timely manner" instead of at the next annual meeting meeting (AGM), which is more than nine months away.

Sabana had appointed Mr Chan as its independent non-executive director from June 2. He also serves as a member of the audit committee and nominating and remuneration committee. His appointment is subject to the endorsement of the Reit's independent unitholders at or before the Reit's AGM.

"We as independent unitholders are puzzled by the board's clear reluctance to put Mr Chan's appointment up for endorsement promptly and the continued lack of any reason for delaying such endorsement," Quarz and Black Crane said in the letter.

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In a statement in response to the requisition notice on Monday, the manager of Sabana Reit said: "We remain open to constructive suggestions and understand that not all stakeholders will agree with all of our decisions that are ultimately for the good of all, and not just select, unitholders.”

The manager added that it had already, earlier in June, provided “a comprehensive and transparent explanation” on why it will not be convening an EGM. “Our focus is to continue delivering the next phase of growth for Sabana Reit at the back of solid results in H1 2021 and continue creating value for all unitholders,” the manager said.

This is not the first time Quarz and Black Crane have objected to Mr Chan's appointment to the board of Sabana Reit.

The two firms in June had sent a requisition letter asking to convene an EGM for the Reit's independent unitholders to vote on Mr Chan's appointment.

Quarz and Black Crane had then also proposed that their own chief investment officers (CIOs), Jan Frederic Moermann and Peter Kennan, respectively, be appointed to the board instead.

Sabana Reit's manager had then rejected convening the requisitioned EGM, as it believed the reasons put forth by Quarz and Crane lack grounds.

Quarz and Black Crane on Monday again flagged that Mr Chan was potentially "in a position of conflict and non-independence" due to his substantial holdings in Aims Apac Reit, which they described as "a major competitor to Sabana Reit".

They also repeated that Mr Chan had sold his stake in ESR Reit, previously known as Cambridge Industrial Trust, to ESR Cayman, in 2017, for a "substantial premium".

In its response to these claims earlier, Sabana Reit's manager had in June stated its "total surprise" to the objections raised by Quarz and Black Crane "since Mr Chan Wai Kheong was one of the nominees for independent director that Quarz Capital had proposed to the manager".

The manager had pointed out that Mr Chan is neither on the board nor involved in the management of Aims Apac Reit. As for Mr Chan's dealings with ESR Cayman, Sabana Reit's manager said that this took place more than four years before his appointment as its independent director, and was hence outside the relevant period.

"It is not uncommon for listed companies to appoint substantial shareholders of other companies (even if they are competitors) as independent directors, given the experience and expertise that these independent shareholders would bring to the table," Sabana Reit's manager had said then. "As a director, Mr Chan will be subject to strict fiduciary duty under the Securities and Futures Act to prioritise the interests of Sabana Reit and its unitholders."

Units of Sabana Reit are closed 1.2 per cent or half a cent higher at 44 Singapore cents on Monday.

READ MORE

• Quarz, Black Crane object to Sabana Reit manager's appointment of Chan Wai Kheong as independent non-exec director
• Sabana Reit rejects EGM requisition to remove director
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