Sabana REIT manager CEO Xayaraj steps down; acquisition of 47 Changi South Ave 2 aborted

SINGAPORE (May 10): Kevin Xayaraj has stepped down from his position as CEO and executive director of Sabana Real Estate Investment Management (SREIM), the manager of Sabana REIT.

Xayaraj’s resignation came despite unitholders of Sabana REIT voting against the removal of SREIM as REIT manager for underperforming at its extraordinary general meeting on April 28.

Jerry Low Chin Yee, the organiser of the campaign to boot out Sabana REIT’s manager, in a Facebook response to the news said, “omg!!! I think we did it!!!!”

Xayaraj has been with the manager since March 15, 2010. His last day with the manager will be on Dec 31, 2017 or such earlier date as may be agreed between the board and him so as to ensure a proper handover and smooth transition for his successor.

In a separate filing, Vibrant Group announced the proposed sale and leaseback of a four-storey light industrial building at 47 Changi South Ave 2, which Sabana REIT was originally intending to acquire, has been terminated.

(See also: Vibrant announces termination of proposed sale of Changi South property to Sabana REIT)

(See also: Sabana REIT’s manager may have won the battle but...)

(See also: Here are the responses our questions drew at Sabana REIT’s EGM)

Meanwhile, SREIM announced a 1Q17 DPU of 0.88 cents for the REIT, 24.1% lower than the 1.16 cents declared a year earlier.

The manager gave a one-time reduction of its base fee for 1Q17 by 75% as unitholders had voted against the resolution to authorise the manager to issue units and to make or grant convertible instruments at its annual general meeting on April 28, and in the interest of supporting unitholders to cushion the dilutive effect on the DPU.

“The quarterly DPU would have been 0.89 cents had the manager continued to receive 80% of its fees in units under the general mandate, and 0.80 cents, if the manager had not forgone any of its fees and received 100% of its fees in cash,” said SREIM.

Distributable income came in at S$9.3 million, 4.6% lower from a year ago.

For the quarter ended March, gross revenue and NPI for the quarter decreased by 6.9% to S$21.9 million and 12.1% to S$13.3 million respectively, due to lower contribution from 200 Pandan Loop and 3 Kallang Way 2A which were divested in 1Q16, lower occupancy from the multi-tenanted properties of 23 Serangoon North Avenue 5, 2 Toh Tuck Link, 8 Commonwealth Lane, as well as 39 Ubi Road 1, which was converted into a multi-tenanted property in 4Q16.

NPI was affected by higher property expenses due to increased net impairment losses on trade receivables in 1Q17 over 1Q16, largely arising from the master tenants at 1 Tuas Avenue 4 and 6 Woodlands Loop whose arrears were in excess of the security deposits held.

The trust also incurred higher service, repairs, maintenance, property tax, land rent, utilities and marketing expenses from 39 Ubi Road 1 upon conversion into multi-tenanted lease arrangements in 4Q16, partially offset by savings in lower property expenses from the multi-tenanted.

In order to fund the working capital, SREIM added it may from time to time sell the units which the nanager received in the past from Sabana REIT in part payment of the base fee.

As for the strategic review announced on April 20, the Strategic Review Committee (SRC) said it has received non-binding proposals from several parties.

“The SRC is evaluating these proposals and Sabana REIT has not entered into any binding arrangement,” says SREIM, “The Manager will make the necessary announcements in accordance with its obligations under the listing rules as and when there are any material developments arising out of the Strategic Review Process.” —

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