The Monetary Authority of Singapore (MAS) says its regulatory framework does not prevent a shareholder group from owning substantial stakes in two REIT managers managing REITs invested in the same property class.
MAS issued the statement on August 28 in response to media queries in relation to the proposed merger between Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) and ESR-REIT.
See also: Sabana REIT issues clarifications on proposed merger
Under the Securities and Futures Act (SFA), boards of REIT managers must comprise at least 50% of independent directors where unitholders do not have the right to vote on the appointment of directors to the board.
The Act also stipulates that REIT managers and their directors have a legal obligation to act “in the best interests” of unitholders, and prioritise unitholders’ interests over those of the REIT manager and its shareholders.
It adds that independent trustees must be appointed for all REITs to safeguard the interests of
unitholders. The trustees are also regulated by MAS.
MAS added that it has put in place additional measures to address specific risks where needed, including that of conflicts of interests for the merger between both REITs.
The proposed merger between Sabana REIT and ESR-REIT requires the approval of at least 75% of unitholders present and voting. The manager of ESR-REIT, its concert parties, common substantial unitholders of both REITs are required to abstain from voting.
The central bank added that unitholders can seek assistance from the Securities Investors Association (Singapore) to engage the managers of Sabana REIT or ESR REIT for clarifications.
As at 10.51, units in ESR-REIT and Sabana REIT were trading at 38.5 cents and 37.5 cents respectively.
