SINGAPORE (April 28): Unitholders of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust will vote today on booting out the REIT’s manager, and perhaps winding up the whole entity. While the likelihood of the resolutions being passed seems low, the courage and determination displayed so far by the unitholders who requisitioned the EGM is quite remarkable. The information they have brought to light, the new path they have tried to forge for the failing REIT, and their scrappy organisational strategies are an inspiration for other small-time activist investors.

At the EGM today, unitholders of Sabana REIT might have one final chance to strike a blow for their cause – by asking some tough questions. Sabana REIT’s manager has confirmed to the Singapore Exchange that its directors and property valuers will be present at the EGM. We understand that the trustee of Sabana REIT will also be present. While it is entirely up to the unitholders present to decide what to ask, our reporters and editors who have followed the Sabana REIT story so far humbly suggest that posing the following questions might be useful for the market.

1) How much did Vibrant Group offer the other shareholders of Sabana REIT’s manager to buy them out? Does Vibrant’s offer to them still stand? What happened?

2) Has the manager or its shareholders had any engagement with representatives of e-Shang Redwood? Is there a plan afoot for e-Shang Redwood to play a role in managing Sabana REIT?

3) Savills, Knight Frank and Colliers have valued 47 Changi South Avenue 2 at S$23 million (RM71.6 million), based on rents under a master lease to Vibrant of S$1.80 to S$2 psf per month. Would representatives of the manager as well as those of Savills and Knight Frank state categorically if they would be concerned about the sustainability of the rental income from the master lease if Vibrant were to lease the space to third parties for less than S$1.80 psf per month? What avenues does Sabana REIT have to ensure that Vibrant honours the master lease?

4) Savills used three valuation methods, including the direct comparison method for 47 Changi South Avenue 2. Will representatives from Savills state precisely which transactions it used as direct comparisons?

5) Sabana REIT’s distributions per unit (DPU) fell sharply over the last three years as master leases on its properties expired and the rents those properties generated proved unsustainable. How many properties in the portfolio still have master lease rentals that are higher than actual market rents? What is the manager doing differently now to ensure that rents from properties acquired under master leases are sustainable?

6) In December, Sabana REIT said it would raise S$80.2 million through a deeply discounted rights issue, and acquire three properties for S$77 million that will not be immediately DPU-accretive. Would representatives of the manager agree that this does more for them than for unitholders? How does this prioritise the interest of unitholders? — theedgemarkets.com.sg

For more stories, download TheEdgeProperty.com pullout here for free.

SHARE
RELATED POSTS
  1. Prime logistics warehouse leasing activity to stay resilient, likely rental growth, says Knight Frank Malaysia
  2. 14 out of 25 cities record positive annual growth in 1H2023 — Knight Frank Asia-Pacific Residential Index
  3. Asia-Pacific logistics rents continue to rise in 1H2023 — Knight Frank