The proposed extraordinary general meeting (EGM) and requisitioned resolutions would not be beneficial to the progress of the internalisation of Sabana REIT, says the REIT’s trustee, HSBC Institutional Trust Services (Singapore).
“In fact, the trustee considers that certain requisitioned resolutions, if passed, may be counter-productive to the overall implementation of the internalisation,” it writes in a letter that was released on the evening of Feb 20.
It adds that it urges unitholders to “carefully consider” the matters when it comes to making their decisions at the proposed EGM, considering that there has already been “substantial work” done on the international. The trustee also already intends to convene an EGM when all the material workstreams of the internalisation are ready for unitholders' consideration in a “holistic manner”.
On Jan 12, Sabana REIT announced that certain unitholders holding more than 10% of the REIT’s units have given a notice of requisition to convene an EGM. The unitholders also proposed for several resolutions to be tabled. These include having the REIT’s trustee to adopt the proposed implementation timeline to set up a new internal manager and to ensure that the implementation timeline be carried out “without delay” among other things.
“The trustee had repeatedly explained its concerns in relation to the requisitioned resolutions, in correspondence with the requisitionists (in the earlier correspondence as well as further correspondence),” says the trustee in its latest letter, adding that it invited the requisitionists to clarify, provide material and meaningful information as well as explain to unitholders to facilitate their decision-making process at the EGM.
At this point, many of the trustee’s concerns remain unaddressed as well, it adds.
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Further to its letter, the trustee notes that some of the requisitions proposed are “confusing and contradict and, or are inconsistent” with the unitholders’ resolutions that were passed at the EGM on Aug 7, 2023. Some of them are also “not actionable or without clear basis and will present challenges and uncertainty in implementation, if passed”. If passed, the trustee’s proposed actions may place the REIT potentially in breach of legal considerations.
The proposed requisitions are also “premature” and “unnecessary” and may even delay the internalisation of the manager.
“The trustee further notes that considerable time and resources have already been spent resolving ambiguities in and disagreements over the scope and effect of certain resolutions passed at the Aug 7, 2023 EGM, including necessitating a court application on the issue of amendments required to the trust deed constituting Sabana Industrial REIT to effect the internalisation,” reads the trustee’s latest letter.
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“If the requisitioned resolutions are passed, their overall effect – of unclear mandates, uncertainty, changes in direction, undermining work done so far and potential conflicts with legal and regulatory considerations – may necessitate the trustee having to consider other appropriate next steps,” it adds.
On Aug 7, 2023, Sabana REIT’s unitholders voted to remove the current manager and voted in favour of the trustee to effect the internalisation of the REIT management function.
The REIT manager, on Jan 23, announced that the REIT had incurred some $1.37 million in costs for the period up to the requisition of the August EGM.
Another $3.27 million was spent relating to the internalisation process based on the resolutions passed at the EGM and additional expenses are likely to be incurred, said the trustee at the time.
As at 9.04am, units in Sabana REIT are trading 0.5 cents lower or 1.35% down at 36.5 cents.
