Sabana Shari'ah REIT

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These guys continue to "create nuisance" and try to get the big boy to blink. The local market could really do with more of such activism.


The Sabana Manager wishes to announce that it had on 10 November 2020 received a letter (the “Requisition Notice”) from Quarz Capital Management and Black Crane Capital requesting the Sabana Manager to convene an extraordinary general meeting to consider certain resolutions, details of which are set out in the copy of the Requisition Notice annexed to this Announcement. The Sabana Manager is considering the Requisition Notice and seeking legal advice, and will make further announcements on SGXNET in due course.
Looks like everyone is not happy that the offer price is a discount to NAV. This brings me back to what d.o.g mentioned previously - Buying at 20% discount NAV is not going to make much money for OPMI, because others will only pay 20% discount NAV for it too.

Victory for the activist fund managers!

Total share count = 1.053bil
Attendance = 576mil (to get 25% to reject the SOA, it meant ~144mil of dissenting votes)
The activist funds own ~11% of Sabana, translating to ~115mil of shares.

Based on the attendance on hindsight, it wasn't a high order to get OPMIs to line in with the activists, since no one will dislike the narrative that the offer price is too low. But it is clear victory generally only comes when there are big boys willing to assume the role of activist.

Hi weijian,

The SOA was not even on. The EGM resolution was for the Trust Deed Amendments to cater for merger via SOA and it was defeated. All can vote for the EGM resolution.

If the SOA was on, I think the percentage for it will be smaller as interested parties cannot vote.
(05-12-2020, 04:40 PM)ghchua Wrote: Hi weijian,

The SOA was not even on. The EGM resolution was for the Trust Deed Amendments to cater for merger via SOA and it was defeated. All can vote for the EGM resolution.

If the SOA was on, I think the percentage for it will be smaller as interested parties cannot vote.

hi ghchua, thanks for correcting my mistake (lost count of how many times you did)

That explained why I didn't see the head count requirement pop up.
The drama at Sabana REIT continues.
Disclaimer :-

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures
If Chan Wai Kheong do not dare to face a shareholder vote now from the shareholders he is supposed to represent, he should quit.

This is call accountability.

Unitholders Demand Sabana REIT Manager  to Promptly Conduct the Requistioned EGM for the Endorsement of Mr Chan Wai Kheong as a Director

We refer to the response from Sabana Real Estate Investment Management ("Sabana REIT Manager", or "REIT Manager") (28 June 2021) to our requisition (and the rationale) to convene an EGM (25 of June 2021) where the board has [b]openly refused to convene the requisitioned EGM promptly to allow independent unitholders to endorse Mr Chan Wai Kheong ("Mr Chan") as an independent Non-executive Director in accordance with the requirements imposed by MAS.[/b]

[b]The ([i]lack of[/i]) courage to face independent unitholders[/b]

Given that the board has strongly promoted Mr Chan's strong credentials, backed his appointment despite the potential conflict of interest issues, and believe that he can be an independent director who represents unitholders' interests, [b]we see no reason why Mr Chan's appointment should not be put up for endorsement by independent unitholders in a prompt manner.[/b]

In fact, we are puzzled by the board's strong reaction and reluctance to put Mr Chan's appointment up for endorsement promptly. [b]Is the board's refusal to hold the EGM promptly attributed to it being aware that Mr Chan's appointment does not have the support of independent unitholders due to his significant prior business relationships with ESR Cayman and substantial stake in a competitor?[/b]

[b]If this is so, isn't this a public acknowledgement by the board that it has appointed a director who is unsuitable to represent and safeguard independent unitholders' interests?[/b]

[b]We call on Mr Chan to "stop hiding" and put himself up for endorsement immediately. Given Mr Chan's strong desire to become a director of Sabana REIT Manager, he should have the courage to face the independent unitholders in an EGM to be held in a timely and prompt manner and adhere to the endorsement requirement specified by MAS. [/b]This will show that Mr Chan is truly committed to protecting independent unitholders in line with his fiduciary and director's duties.

[b]Stop "circumventing" the regulation and start fulfilling your duties![/b]

[b]We remind the board members of their fiduciary duties[/b] specifically with reference to Sections 286 (10A) and 286(10B) of the Securities and Futures Act, which stipulates that REIT managers and their directors [b]must act in the best interest of all unitholders and prioritize unitholders' interests over those of the REIT manager and its shareholders.[/b]

[b]The refusal to hold the EGM in a prompt manner is puzzling. The EGM was requisitioned to allow independent unitholders who hold over 75% of Sabana REIT's total unitholdings to timely evaluate and promptly endorse / vote on whether the new board member can represent and safeguard unitholders' interests and if it is clearly in the best interest of independent unitholders. As such, if the board members claim that they fulfill the duties specified in Sections 286 (10A) and 268 (10B) of the Securities and Futures Act, they should allow the requisitioned EGM to be held promptly.[/b]

[b]If the Board is fully confident of Mr Chan's independence and that he has the support of independent unitholders, there is also no reason to wait for the next annual general meeting in 2022 for Mr Chan's endorsement.[/b]
MAS has put in place the endorsement requirements to ensure that the current board will appoint a new director who is independent and can safeguard independent unitholders' interests, ensure good corporate governance and prevent the potential conflict of interest issues that can be created through ESR Cayman's ownership of 2 REIT Managers operating in the same sector.

Such endorsement requirement was also specifically imposed by MAS after the failure of the value destructive merger proposed by the board [b]which was comprehensively rejected by more than ~60% of all independent unitholders (despite it requiring 75% supermajority of independent unitholders support) [/b]and cost unitholders more than ~$2.1million in fees as a safeguard against the potential conflicts faced by the Board.

[b]By postponing the endorsement to the next AGM which is 10 months' away, the board of Sabana REIT Manager is effectively 'circumventing' and 'bypassing' MAS regulation[/b] i[b].e. Sabana REIT Manager could repeatedly appoint a director right after an AGM who is 'aligned to its view' instead of prioritizing independent unitholders' interests. The REIT Manager can then again refuse to conduct any EGM until the next AGM (which is 12 months away) akin to what is happening now. When the director is not endorsed in the next AGM, the REIT Manager can simply appoint another director 'aligned to its view' without getting endorsement from unitholders and repeatedly exploit this loophole.[/b]

This will essentially allow Sabana REIT Manager to 'bypass' MAS's specific safeguard to protect Sabana unitholders and render such endorsement requirement futile and ineffective.

[b]We urge the board of Sabana REIT Manager to fulfill their directors' and fiduciary duties and hold the requisitioned EGM to put Mr Chan's appointment up for endorsement by independent unitholders in accordance with the requirements imposed by MAS as soon as practicable and without delay, not later than 2 months after the receipt by the Company of our requisition notice of 25 June 2021.[/b]
Was doing some quick research back on different REITs and this thread popped up on Google.
So popping in here again just for fun.

I remember mentioning back then that Shariah Compliance is something that will be holding them back. The selling point at IPO becomes not a selling point.

With Shariah Compliance now removed, and with the REIT below NAV, I decided to do a quick look at what else has changed. Main thing is that master lease went from >50% to 11%, which I think put it as lesser risks of a master tenant stopping.

Only two reasons I still won't enter:
1) Don't see any strong sponsor still.
2) There are much better alternatives at the moment.
CNY HUAT!  Big Grin offer for Sabana at S$0.465

The Offeror will make the Partial Offer in accordance with Rule 16.2 of the Singapore
Code on Take-overs and Mergers (“Code”), on the following basis:
(a) Offer Price. The Partial Offer is made for S$0.465 in cash in respect of each Offer
Unit (“Offer Price”).

(b) Relevant Unitholders. The Partial Offer will be extended to all unitholders of the
Offeree (other than the Offeror and parties acting in concert with it) (“Relevant
Unitholder”) on the record date to be determined, which will fall on the 14th day before
the First Closing Date (as defined below) of the Partial Offer (or if such day falls on a
non-business day, on the immediately following business day) (“Record Date”).
Not sure how much "huat" there is when the offer is still at ~12% discount to NAV. But the discount is still better than ~2 years back although much of the compression in discount from ~20% to current 12%, may be actually be attributed more to NAV reduction?

Nonetheless, this offer is much interesting as it is a partial offer by an OPMI who desires to upgrade to a SSH. Shareholders should probably ignore this partial offer to test the desperateness of this OPMI's intent to diversify out of their fossil fuel roots.

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