The bitter battle between the managers of Sabana Shariah-compliant Reit and some disgruntled investors looks like it will come to a head at an extraordinary general meeting (EGM) on April 28.
The EGM has been called at the behest of 66 unit holders who in January began a campaign against Sabana Real Estate Investment Management.
They cited dissatisfaction with the Reit manager's lacklustre performance and three years of falling distributions per unit.
Four resolutions will be tabled at the EGM. The first two call for Sabana Real Estate Investment Management to be removed and an in-house manager to be set up instead.
The third and fourth resolutions order Sabana Reit to be wound up if its manager cannot be replaced.
According to the circular put out by the Reit manager yesterday, a simple majority vote of unit holders is required to pass the first two resolutions.
But the third and fourth ones will be tabled as "extraordinary resolutions" requiring a super majority of 75 per cent to pass.
This is because unit holders do not have the right to wind up Sabana Reit under the Trust Deed. So to make the resolution workable, the Reit must first be delisted, a move that requires approval from a super majority.
Sabana Real Estate Investment Management chief executive Kevin Xayaraj said the resolutions basically ask unit holders to "weigh between the known and unknown".
He told The Straits Times: "If resolution one 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.
Unit holders can expect an interim update on the review before April 21, said Mr Xayaraj, who added: "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, adding: "There is no communication between me and the strategic partners."
Sabana Reit will also hold a dialogue with unit holders on April 21, a week before the EGM.
Mr Jerry Low, a stockbroker who requisitioned the EGM, said he was not convinced by Mr Xayaraj's comments: "They refuse to acknowledge the damage they have inflicted on the Reit's property portfolio.
"We want to remove this manager. If we cannot remove the manager, we'd rather face the unknown and wind up the trust."