Date: January 25, 2017
SIAS notes the shareholder activism efforts by some unitholders of Sabana REIT to seek accountability from the REIT manager for alleged poor performance. Unlike in a normal listed company, where shareholders, with a majority, can vote out and vote a new board in, REIT managers are Capital Markets Services (CMS) Licence holders.
Unitholders need to take note that and any new manager will have to be a CMS license holder and will also need to comply with regulations governing REITs in Singapore. If an existing REIT manager is appointed they would still need to seek approval from MAS to also manager Sabana REIT. There is also the requirement that the REIT has a manager at all times.
In addition, unitholders should take note that some loan covenants could provide that, in the event of a change in manager, it could trigger the loan to be recalled and this needs to be adequately addressed before any change of REIT manager.
Unitholders should also be aware that one of the proposed resolutions calls for the winding up and /or divestment of all properties in the Sabana REIT portfolio should the proposed REIT manager not be approved by the authorities. In this current economic conditions, unitholders may lose out with a divestment.
SIAS regrets that management has not addressed the concerns of unitholders earlier and for the situation to deteriorate to point where unitholders feel the need to replace REIT manager or liquidate the REIT. SIAS calls on the Sabana REIT to address the concerns of unitholders adequately, put forth a detail plan to avoid liquidation of the REIT and resolve the issues to the satisfaction of unitholders.
Founder, President & CEO
Securities Investors Association (Singapore)