Showdown with unitholders: Sabana Reit sets EGM for April 28

Sabana Real Estate Investment Management chief executive Kevin Xayaraj said the resolutions basically ask unitholders to "weigh between the known and unknown".
Sabana Real Estate Investment Management chief executive Kevin Xayaraj said the resolutions basically ask unitholders to "weigh between the known and unknown".PHOTO: SABANA REAL ESTATE

SINGAPORE - The showdown between the manager of Sabana Shariah-compliant Reit and a group of disgruntled unit holders is set to take place this month.

An extraordinary general meeting (EGM) will be convened on April 28, a Friday, at the behest of 66 unitholders who in January began a campaign against Sabana Real Estate Investment Management, citing their dissatisfaction with the Reit manager's lacklustre performance and three years of falling distribution per unit (DPU).

Four resolutions will be tabled at the EGM.

Resolution 1 calls for Sabana Real Estate Investment Management to be removed as the Reit manager.

Resolution 2 directs the Reit trustee to incorporate an in-house Reit manager to replace Sabana Real Estate Investment Management.

Resolutions 3 and 4 order Sabana Reit to be wound up if the Reit manager cannot be replaced.

According to the circular put out by the Reit manager on Thursday (April 6), a simple majority vote of unitholders is required to pass Resolutions 1 and 2.

But Resolutions 3 and 4 will be tabled as "extraordinary resolutions" requiring a super majority of 75 per cent to pass.

This is because unitholders do not have the right to wind up Sabana Reit under the Trust Deed and in order to make the resolution workable, the Reit must first be delisted. Delisting requires approval from a super majority.

Sabana Real Estate Investment Management chief executive Kevin Xayaraj said the resolutions basically ask unitholders to "weigh between the known and unknown".

He told The Straits Times: "If Resolution 1 is passed, there is no team ready to take over. That will also potentially trigger breaches in loan covenants, defaults."

On the other hand, "the known" refers to a strategic review being undertaken by the Reit, Mr Xayaraj said.

The review includes seeking out new partners that can feed Sabana Reit a pipeline of quality assets to improve its property portfolio and borrowing ability, and may or may not involve bringing on a new sponsor alongside Sabana's current sponsor, Vibrant Group.

Unitholders can expect an interim update on the review before April 21, said Mr Xayaraj: "We have made material progress. (Our financial adviser) Morgan Stanley has been in touch with quite a number of interested parties."

Private equity firm Warburg Pincus has built up a 5 per cent stake in the Reit since the strategic review was commenced, but its intention has not been made known to him, Mr Xayaraj said.

"There is no communication between me and the (potential) strategic partners. We just ask Morgan Stanley to be the contact point and take it from there."

Sabana Reit will also hold a dialogue session with unitholders in collaboration with the Securities and Investors' Association of Singapore on April 21, a week before the EGM.