Prep work for Sabana Reit’s new internal manager should take no more than 3 to 4 months, says Quarz

SINGAPORE - Activist investor Quarz Capital said the trustee of Sabana Industrial Real Estate Investment Trust (Sabana Reit) should take no more than three to four months to do the preparatory work required to set up a new internal Reit manager.

Laying this out in an open letter on Wednesday, Quarz also said that delays in the set-up by the trustee, HSBC Institutional Trust Services, would prejudice the interest of the Reit’s unit holders.

Quarz, which holds units of Sabana Reit, said it came up with the three- to four-month window for preparatory work from its engagement with stakeholders, service providers and professionals with strong track records in setting up new Reit managers, following the Reit’s Aug 7 extraordinary general meeting.

Preparatory work refers to the incorporation and set-up of the internal manager, human resources considerations, documentations and filling up the application form for the Monetary Authority of Singapore (MAS), it noted.

Quarz said in the letter: “All (the engaged parties) outlined clear and straightforward processes which the trustee can set up and license the internal manager, due to the transparent and precise application process and licensing requirements provided by MAS.”

They agreed that the preparatory work required to submit the application for the licence to MAS should not take longer than three to four months, Quarz pointed out.

It also expressed confidence in the level of expertise and number of precedent cases that would support the trustee in expediting the set-up of the internal manager, and noted that MAS has approved more than 45 Reit management and 1,000 capital markets services fund management licences.

Quarz also noted that a number of law firms have strong track records in this area of work, having set up more than five new Reit managers each; such firms can “strongly support” Sabana in this process.

Quarz said that since HSBC Institutional Trust Services has repeatedly stated that its responsibility is to support unit holders and act in their best interests, it should push forward the internalisation “swiftly and decisively”.

This means that the trustee should set a clear target to complete the set-up and licensing of the internal manager by the Reit’s April 2024 annual general meeting, it said.

Doing so would require the trustee to give unit holders a clear, detailed timeline of the process, for the sake of accountability and transparency, it added.

The trustee should also give a breakdown of the amount of time needed for preparatory work before submitting the application to MAS, it said.

Quarz stressed: “We remind the trustee that any delay in the set-up process of the new internal manager clearly prejudices the interest of all unit holders.”

It reiterated: “Any delay in the set-up prejudices the interest of all unit holders and is in conflict with the trustee’s key responsibility to safeguard unit holders.”
THE BUSINESS TIMES