SINGAPORE - A group of Sabana Industrial Real Estate Investment Trust (Sabana Reit) unit holders who requisitioned for an extraordinary general meeting (EGM) to be held are now requesting to withdraw and modify some of the resolutions they had initially proposed.
The unit holders, who call themselves the Sabana Growth Internalisation Committee (SGIC), are led by activist investor Quarz Capital.
Sabana Reit’s manager disclosed the Feb 7 letter from SGIC on Feb 8 and said that it is considering the letter’s contents while seeking legal advice.
In the letter, SGIC said it was “disappointed” to note that Sabana Reit’s trustee had “not provided any real response” to its previous offers or requested clarifications.
“We wish to state that we share the trustee’s desire for clarity and progress, and had requisitioned the EGM precisely because we are dissatisfied with and concerned about the trustee’s apparent lack of clarity or progress on internalisation,” wrote the unit holders.
They also noted that the trustee has incurred “staggering additional costs” of about $3.2 million to date to implement Sabana Reit’s internalisation of its manager.
SGIC’s proposed withdrawals and modifications to the EGM would therefore be to “reduce costs and minimise the issues that will be discussed at the EGM, as well as the need for potential further EGMs on the basis of the existing requisitioned resolutions”.
It is proposing that the first two ordinary resolutions be withdrawn. The first resolution is to adopt a proposed implementation timeline for the setting up of a new internal manager and the internalisation process, while the second mandates that Sabana Reit’s trustee, HSBC Institutional Trust Services, carry out such a timeline “without delay”.
SGIC said it was prepared to withdraw these resolutions as it acknowledged the trustee’s response stating that it was unable to commit to such a timeline. “We further note that the trustee has already incurred substantial fees with little progress to show for it.”
Another resolution asked for the trustee to provide all Sabana unit holders with bi-weekly written updates on the internalisation process. SGIC is looking to amend the frequency to a monthly basis to account for the trustee’s “slower pace” of providing written updates.
“Given that the trustee is already spending approximately $3.2 million for internalisation, we believe that the unit holders need to know how their monies are being spent in a timely manner. This is not an onerous task that will take time away from the trustee.”
The group previously requested that the trustee form a committee of at least five individuals to oversee the Reit’s internalisation process according to the timeline – of which two should be proposed by SGIC, with the remaining three to be proposed, appointed or removed by the majority vote of unit holders.
While it is still being sought for the trustee to form an internalisation committee, the number of individuals and requisites for their appointments have been removed from the proposed revised resolution.
Lastly, the unit holder group is seeking for additional declaration to be placed before the court, together with an ongoing application for the amendment of the trust deed.
SGIC previously sought clarification from the trustee on whether the manager, unit holders and concert or related parties should abstain from any vote regarding the trust deed. However, it now believes that Sabana Reit’s trustee “ought to be directed to place this question to the court”.
“We remain concerned that there are still questions as to how internalisation will be implemented and that the trustee does not appear to be forthcoming with its plans and requests for clarifications on the same,” said the unit holder group.
“Accordingly, while we are appreciative of the trustee’s attempts to better understand our position, we would like to reiterate that the EGM is the internal democratic process in which unit holders can discuss and engage on these questions in an open dialogue. We therefore ask that the EGM proceed without any delay.”
Units of Sabana Reit closed up 0.5 cent, or 1.35 per cent, at 37.5 cents on Feb 8, after the news. THE BUSINESS TIMES
