Sabana Reit unitholders vote against resolution to initiate price discovery process at EGM

[SINGAPORE] A resolution tabled by some Sabana Industrial Real Estate Investment Trust (Sabana Reit) unitholders to initiate a price discovery process with a view to selling the Reit’s properties failed to pass at an extraordinary general meeting (EGM) held by its manager on Tuesday (Apr 22).

The resolution, which was tabled by former Sabana Reit director Charlie Chan and other unitholders, garnered 42.84 per cent or 288,170,736 of the total number of votes cast by unitholders. This was less than the 50 per cent of votes required to pass the resolution.

Two other related resolutions also failed to pass at the EGM, which was held at New Tech Park in Lorong Chuan.

The EGM was convened after Chan, a former independent non-executive director, and other unitholders who collectively own about 20 per cent of the trust’s units submitted a requisition notice to the manager in January this year.

They sought to pass three resolutions.

The first resolution asked for trustee HSBC Institutional Trust Services (Singapore) and the manager to commence and undertake a price discovery process, with a view of “achieving a possible sale of all or (the) majority” of the Reit’s assets.

The requisitionists also requested that the trustee and/or manager appoint an “internationally reputable” firm of property consultants “with a track record” of selling Singapore industrial properties to oversee the price discovery process.

Lastly, they asked Sabana Reit’s trustee and manager to complete the price discovery process within three months from the passing of the resolutions.

The unitholders called for the EGM as they believed “significant costs” have been and continue to be incurred by the Reit in relation to the internalisation process of the manager. Unitholders voted to internalise the management function of Sabana Reit in August 2023.

More than S$11 million spent on internalisation

Speaking before the vote, Chan explained to shareholders that he initiated the requisition as he felt that the trust’s share price has not grown since the internalisation process kicked in. This was despite S$11.8 million being spent on the internalisation process.

He noted that other Reits have been able to sell their assets above valuation and suggested that Sabana Reit’s manager find out how much the buildings are “really worth”.

“If I find that some people are willing to pay us close to book value… we can consider whether we want to sell (the assets) as opposed to going through internalisation,” he said.

He questioned if a change of the Reit manager via the internalisation process would truly help to increase the trust’s book value, which is currently trading at a discount of around 25 per cent.

In response, Havard Chi, who is the research head of activist investor Quarz Capital which initiated the internalisation process at Sabana Reit, said the disposal of non-core assets will be “one of the key strategies” to unlock value for unitholders once the elected directors of the internalised manager are officially appointed.

In its latest Q1 financial results on Apr 15, Sabana Reit posted a distribution per unit of S$0.0086 for the quarter ended Mar 31, up 26.5 per cent from S$0.0068 in the same period the year before.

This came on the back of 27 per cent higher distributable income, which stood at S$9.8 million at the end of the period, led by higher net property income and partially offset by higher finance costs.

Units of Sabana Reit were trading flat at S$0.355 as of 1.30 pm on Tuesday.