A GROUP of Sabana Industrial Real Estate Investment Trust (Sabana Reit) unitholders who requisitioned for an extraordinary general meeting (EGM) to be held are now requesting to withdraw and modify some of the resolutions they initially proposed.

 

The six unitholders who call themselves the Sabana Growth Internalisation Committee (SGIC) are led by activist investor Quarz Capital.

 

Sabana Reit&rsquo s manager disclosed the Feb 7 letter from SGIC on Thursday (Feb 8) and said it is considering the letter&rsquo s contents while seeking legal advice.

 

In the letter, SGIC said it was &ldquo disappointed&rdquo to note that Sabana Reit&rsquo s trustee had &ldquo not provided any real response&rdquo to its previous offers or requested clarifications.

 

&ldquo We wish to state that we share the trustee&rsquo s desire for clarity and progress, and had requisitioned the EGM precisely because we are dissatisfied with and concerned about the trustee&rsquo s apparent lack of clarity or progress on internalisation,&rdquo wrote the unitholders.

 

They also noted that the trustee has incurred &ldquo staggering additional costs&rdquo of about S$3.2 million to date to implement Sabana Reit&rsquo s internalisation of its manager.

 

SGIC&rsquo s proposed withdrawals and modifications to the EGM would therefore be to &ldquo 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&rdquo .

 

It is proposing that the first two ordinary resolutions be withdrawn.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&rsquo s trustee, HSBC Institutional Trust Services, carry out such a timeline &ldquo without delay&rdquo .

 

SGIC said it was prepared to withdraw these resolutions as it acknowledged the trustee&rsquo s response stating that it was unable to commit to such a timeline.

 

&ldquo We further note that the trustee has already incurred substantial fees with little progress to show for it.&rdquo

 

Another resolution asked for the trustee to provide all Sabana unitholders 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&rsquo s &ldquo slower pace&rdquo of providing written updates.

 

&ldquo Given that the trustee is already spending approximately S$3.2 million for internalisation, we believe that the unitholders 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.&rdquo  

 

The group previously requested that the trustee form a committee of at least five individuals to oversee the Reit&rsquo s internalisation process according to the timeline &ndash of which two should be proposed by SGIC, with the remaining three to be proposed, appointed or removed by the majority vote of unitholders.

 

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 unitholder 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, unitholders and concert or related parties should abstain from any vote regarding the trust deed. However, it now believes that Sabana Reit&rsquo s trustee &ldquo ought to be directed to place this question to the court&rdquo .

 

&ldquo 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,&rdquo said the unitholder group.

 

&ldquo Accordingly, while we are appreciative of the trustee&rsquo s attempts to better understand our position, we would like to reiterate that the EGM is the internal democratic process in which unitholders can discuss and engage on these questions in an open dialogue. We therefore ask that the EGM proceed without any delay.&rdquo

THE manager of Sabana Industrial Real Estate Investment Trust (Sabana Reit) announced on Thursday (Feb 1) that it would convene the extraordinary general meeting (EGM) requisitioned by a group of activist investors.

 

The group of unitholders, who call themselves the Sabana Growth Internalisation Committee (SGIC), are led by activist investor Quarz Capital.

 

The committee had sought in December to convene an EGM to pass 12 resolutions to direct the Reit&rsquo s trustee on the internalisation of the Reit manager.

 

This came after Quarz Capital requisitioned a separate EGM last June to pass two resolutions: to remove Sabana Reit&rsquo s manager, and to direct the trustee to internalise the Reit&rsquo s management function.

 

The unitholders voted in favour of both resolutions in August last year, and the trustee has been working on steps to implement them.

 

The manager said in a statement on Jan 8 that it would not convene the EGM as the requisition notice did not comply with the requirements of the trust deed. But it said it would consider any requisition notice that was properly submitted.

 

Following this, the group of unitholders submitted another requisition notice on Jan 11.

 

In its statement on Thursday evening, the Reit&rsquo s manager said it is convening the EGM in accordance with its duty to do so under the trust deed.

 

Details of the EGM &ndash including the date, time and venue &ndash will be announced separately in due course.

 

Earlier this week, Sabana Reit&rsquo s trustee issued a statement saying that it rejects SGIC&rsquo s suggestions that it has committed wrongdoing or delayed the internalisation of the Reit&rsquo s management function.

 

The trustee, HSBC Institutional Trust Services, was responding to a letter it received from the requisitioning unitholders on Jan 29. Among other things, SGIC had said that it should be allowed to hold the requisitioned EGM as part of the internal democratic process of the Reit.