An attempt by frustrated minority shareholders to fire the manager of Sabana Shariah-compliant Reit was thwarted by large investors at a dramatic three-hour extraordinary general meeting (EGM) yesterday.
The Reit's sponsor Vibrant Group and others holding large blocks of units fended off the challenge.
A vote of 69.5 per cent rejected the removal of Sabana Real Estate Investment Management, although many of those who filled Hall 404 of Suntec Singapore Convention and Exhibition Centre voiced grave "disappointment" with how the industrial Reit had been run.
Sabana Reit units have soared some 23 per cent since the minority offensive was mounted in late January. They closed 1.5 cents lower at 45.5 cents yesterday.
The failed ouster means it will be business as usual for Sabana, and investors can only hope for the best when the Reit manager eventually completes a strategic review to seek out new partners and possibly a new sponsor.
Observers said the resolution to remove the Reit manager might have stood a better chance if a company had been set up with the proper licence in place to act as a ready replacement manager.
The vote rejecting the removal of Sabana Real Estate Investment Management
In this case, entrusting the HSBC trustee of the Reit to search for a qualified replacement manager would have been a long process that many investors would not have been able to stomach. But a few unit holders believed they had clinched a "small victory" yesterday.
Earlier that morning, a mandate that would have authorised the Reit manager to issue new units and to make or grant convertible instruments failed to pass, with 54.4 per cent of votes cast against it.
Yesterday's EGM was also the first time the Reit's independent property valuers faced unit holders since a furore erupted in February over how Savills, Knight Frank and Colliers had all come up with the same valuation of a building - 47, Changi South Avenue 2 - of $23 million. That was also the amount that Vibrant Group was asking for the property. In 2011, it had paid just $10.9 million for it.
Savills said it had used the direct comparison method to value the property. Asked which properties it used as direct comparisons, a Savills representative replied: "All our market evidence is transparent...
"I don't think this is the correct forum to sit and state each of the exact comparables."
The biggest stir, however, arose from an exchange between the Reit manager's chairman Steven Lim Kok Hoong, who is an independent non-executive director, and unit holder and hedge fund manager Charlie Chan.
Mr Chan asked Mr Lim if he stood by all the property valuations, to which Mr Lim said: "Can we just deal with one thing at a time?"
Mr Chan said: "I presume you signed the annual report, so you are happy with the valuations."
Mr Lim replied, to jeers: "No, signing an annual report doesn't mean that I am giving an opinion on the valuations."
Yesterday evening, the manager clarified that its directors are not licensed valuers. The board signed off on the report in reliance on the valuation determined by the professional valuers.
Although Sabana Reit argues that rental income support from the vendors justifies higher property valuations, when these master leases expire, unit holders would have been left with multi-tenanted properties at lower occupancy levels that result in higher operating expenses.
Retiree Tan Cheng Kiat remained convinced that the Reit manager has been overpaying for its acquisitions. He said: "There must be a proper way to get closure.
"Either tell me I'm wrong or get things fixed."