On Dec 6, HSBC Institutional Trust Services (HSBC Trustee), Sabana Industrial REIT’s trustee announced it is copied in a letter to SGX RegCo, the Monetary Authority of Singapore, and the Minister for Finance from the Sabana Growth Internalisation Committee with 93 points. HSBC Trustee says: “The Trustee assumes no responsibility for any of the contents of the SGIC Letter, including the accuracy, completeness or correctness of any of the information statements or opinions made or reports contained in the SGIC Letter. The views expressed in the SGIC Letter should not be construed in any way as representing the views of the Trustee.”
When asked if SGX RegCo is likely to make a statement on the 93 points in the letter, a spokesperson for SGX Group says: "The matters raised are commercial issues. SGX RegCo notes that the trustee has appointed its own legal advisor. Unitholders should await further updates on this matter by the trustee. SGX RegCo therefore has no comment."
Among the 93 points, the SGIC says it “seeks answers and guidance from MAS and SGX RegCo [that] the Internalisation and the implementation of the Specific Governance Rights do not necessitate any Trust Deed Amendments. That, even if an extraordinary resolution of the unitholders is required for the Trust Deed Amendments, the sponsor and its concert/related parties are prohibited to vote on a resolution concerning any Trust Deed Amendments for the purposes of effecting Internalisation. The clear reason is their inherent conflict of interest as their fee income is directly affected by the outcome.”
On Aug 7, in an EGM, unitholders voted to remove the manager which was duly passed with a simple majority, as was the internalisation resolution. At present, Sabana Industrial REIT has three major unitholders, ESR Group, Volare and Quarz Capital Asia. Some unitholders are wondering if Sabana REIT has a sponsor as all unitholders are understood to have the same standing following the vote to remove the manager.
To take a step back, on July 7, before the EGM, HSBC Trustee had written to unitholders that if they voted out the manager, the internalisation process could take at least 12 months. On Aug 2, HSBC Trustee in a letter to unitholders added that “the Trustee currently expects to have to hold two or more further EGMs to seek Unitholders’ directions on specific matters to carry out the Resolutions, potentially including but not limited to: to approve the necessary and specific amendments to the Trust Deed by way of extraordinary resolution(s) of the Unitholders”.
The requisionist for the EGM to remove the manager and for internalisation was Quarz Capital. In open letters including to the media, Quarz Capital has articulated that the internalisation process should take around four months, as reported by the media.
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What do unitholders who are not on the SGIC think about SGIC’s 93-point letter? “The Trustee has told us that the change of trust deed involves extraordinary resolutions as investors in Sabana REIT are bound by its trust deed. It is not surprising that we need 75% of unitholders present and voting to modify the trust deed. We should respect the process. The requisionist should have read the trust deed and heeded the trustee’s cautionary announcements before the EGM,” says a unitholder with a few million Sabana REIT units.
Perhaps what unitholders would like is an estimation of the cost as at end-December. To date, HSBC Trustee has appointed FTI Consulting, Rajah & Tann, KPMG and is planning to appoint a head hunting company to implement the internalisation.
As for the SGIC letter to SGX RegCo and MAS, HSBC Trustee says: “The Trustee is seeking legal advice with regard to its contents and will respond at an appropriate time. The Trustee is also intending to provide an update as to progress of the various workstreams being undertaken in connection with the internalisation of the REIT management function of Sabana Industrial REIT in a separate announcement expected to be made later in December 2023. In the meantime, the Trustee disagrees with any suggestion of any wrongdoing or delay on its part.”
