THE manager of Sabana Industrial Real Estate Investment Trust (Sabana Reit) is considering several modifications to the resolutions proposed by Quarz Capital while seeking legal advice, it said on Wednesday (May 29).
The extraordinary general meeting (EGM) requisitionists proposed changes to the resolutions in response to the court ruling updated last Friday that requires trust deed amendments to effect the internalisation of the manager function.
“The modifications are done with the intention for Sabana unitholders to provide clarity to the trustee and expedite the internalisation process which is in line with the trustee’s stated intention in its May 24 update,” said the requisitionists, adding that this is in the “best interest of and highly beneficial to all Sabana unitholders”.
The proposed changes include necessitating amendments to the trust deed as per the court ruling, which set out certain dealing conditions for the manager with related corporations.
This is changed from the first resolution that “the trustee be directed not to amend trust deed related to clearly and expressly authorising Sabana Industrial Reit to hold unlisted shares in a company providing internal Reit management functions”.
The passing of this changed resolution will enable the trustee to incorporate and fund the internal manager which will be owned by all Sabana unitholders, said the requisitionists.
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In line with the trustee’s indicative internalisation timetable to establish the new internalised manager by the beginning of Q2 2024, Quarz Capital also proposed to amend the second resolution to direct the trustee to incorporate the internal manager within one month from the passing of the first resolution.
Additionally, the trustee should submit the necessary licensing application for the internal manager within one and a half months from the passing of the first resolution, as it proposed to amend the third resolution.
Among other proposed changes, the requisitionists have withdrawn the resolution deemed unnecessary to effect internalisation as per the court ruling.
Meanwhile, the requisitionists requested the EGM proceed without any change of the existing timeline.
As HSBC Institutional Trust Services, in its capacity as trustee of Sabana Reit, has been directed by unitholders to effect the internalisation exercise, the manager noted that it will be discussing the proposed amendments with the trustee on the next steps.
The Singapore High Court also ruled that ESR entities are prohibited from voting on the amendments, said the trustee on May 24.
The ruling was on the trustee’s application filed in January, which sought court declarations that proposed amendments were required to implement internalisation. It also needed a declaration on whether ESR entities ought to be permitted to vote on the amendments.
The internalisation saga began nearly a year ago. Activist investor Quarz Capital requisitioned an EGM last June to pass two resolutions relating to the internalisation of Sabana Reit’s manager. It said that the cost savings by removing the external manager would benefit unitholders.
On the other hand, the owner of Sabana Reit’s manager sponsor ESR Group, warned about risks and uncertainty for unitholders. This is on top of a considerable amount of time and costs involved in such internalisation.
On Aug 7, 2023, unitholders of Sabana Reit voted in favour of internalisation. However, the amendment of the trust deed had been a point of disagreement.
The trustee held the view that such an amendment is needed for internalisation, requiring an extraordinary resolution, which has a 75 per cent approval threshold. Quarz, however, disagreed. It was previously said that this was an “impossibly high threshold”, and requiring a trust-deed amendment has a “serious and negative impact” on unitholders.
As at 9.59 am on Thursday, units of Sabana Reit : M1GU 0% were trading flat at S$0.36.
