SIX candidates proposed by a group of requisitionists were voted by unitholders to be board directors of the newly internalised manager of Sabana Industrial Real Estate Investment Trust (Reit) at an extraordinary general meeting (EGM) held on Friday (Oct 18). All six candidates garnered a vote share of slightly more than 60 per cent in favour of their directorship.
The candidates included consultant Lim Hock Chuan; corporate finance and investment professional Bhavik Umesh Doshi; and Konrad Duttwiler, who is group chief financial officer and board member of investment company Volare Group.
The other three were activist investor Quarz Capital’s founder Jan Frederic Moermann and director Havard Chi, as well as Saha Anshuman Manabendranath, who previously worked at IT consulting company Pan Asia Resources.
Their final appointment to the board remains subject to approval from the Monetary Authority of Singapore (MAS).
The three candidates nominated by the trustee, on the other hand, received a vote share of under 8 per cent at the meeting, which was held at Hope@New Tech Park in Lorong Chuan.
The trustee’s candidates were independent real estate and investment consultant Chew Tuan Chiong, New Financial Holdings’ managing director of asset management Jimmy Chan, and independent adviser Sandip Talukdar.
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Shareholders question proposed directors’ pledges
The EGM, which lasted more than an hour, had been requisitioned by five unitholders, led by Quarz Capital, which holds a 14 per cent stake in Sabana Reit.
The lead-up to the meeting had been fraught with disagreements between the requisitionists and the trustee on each other’s choice of candidates.
The disagreements were in relation to the independence of the trustee’s candidates, and whether the appointment of the requisitionists’ candidates would affect the new Reit manager’s application for a capital markets services licence. The licence permits companies to conduct regulated activity such as Reit management.
During a question-and-answer segment prior to the voting on resolutions, unitholders also questioned pledges that the requisitionists’ candidates had made.
These included committing to be paid the director’s fees of less than S$45,000 per year, receive at least 25 per cent of those fees in Sabana Reit units, and maintain a meaningful stake by not selling the units they receive as director’s fees for at least a year.
In response to a unitholder’s comment that a year was too short a time to keep the units, as per the pledge, Chi said that the requisitionists’ candidates had informed him that they plan to keep their units for as long as they are directors.
Chi added that if the directors proposed by the requisitionists were to successfully increase the distribution per unit (DPU) and unit price of Sabana Reit, the reward to directors would be “far in excess” of their director fees.
Next steps
Chi told The Business Times that once approved by MAS, the board’s main focus would be to improve the DPU and unit price of Sabana Reit. It will do so by improving the occupancies of the Reit’s properties for a start, he added.
The board also aims to put a management team for the Reit by next January, said Chi, adding that several people have already stepped forward to be considered for the chief executive officer appointment, including former industrial Reit CEOs.
The trustee said in a statement on Friday that it respected the outcome of the EGM. It added that it will continue to advance the internalisation process “as expeditiously as possible”.
The trustee also noted that information on the Reit manager’s board composition is required for Sabana Reit to qualify for the capital markets services licence.
It added that it had already submitted all the information provided by the requisitionists’ candidates to MAS for its review and consideration prior to the EGM. It will now await the outcome of the capital markets services licence application, including the appointment of the selected director candidates, noted the trustee.
Donald Han, CEO of the Reit’s manager, thanked unitholders in a statement on Friday for their appreciation of the Reit’s management team despite ongoing challenges due to the internalisation process.
Business update
Separately on Friday, Sabana Reit reported an increase in overall portfolio occupancy to 84.9 per cent for the third quarter ended Sep 30, 2024, up from 78.8 per cent in the previous quarter.
The improvement was attributed to the signing of new leases covering 313,953 square feet and the renewal of 15,974 sq ft of leases, the Reit’s manager said in an evening bourse filing.
As at end-September, Sabana’s portfolio had a weighted average lease expiry of 2.6 years, down from 2.7 years in the previous quarter.
Aggregate leverage stood at 37 per cent with an interest coverage ratio of 3.2 times.
Total borrowings stood at S$353 million as at end-September, up from S$340 million in end-June and S$318 million in end-2023.
In Q3, Sabana also took steps to address earlier disruptions caused by the repossession of two master-tenanted properties.
As part of its strategy, the trust has moved from a master tenancy to an anchor tenancy model, Han said.
“To this end, we have filled up approximately 74 per cent of the net lettable area at 33, 33A and 35 Penjuru Lane with two anchor tenants,” he added.
“We are concurrently carrying out a property reconfiguration initiative at 30 and 32 Tuas Avenue 8 to allow maximum leasing flexibility from early next year.”
Units of Sabana Reit closed unchanged at S$0.385 on Friday, following the lifting of a trading halt.
