Tuesday 8 August 2023

Sabana REIT Unitholders Bumped Off Sponsor's REIT Manager At Historic EGM.

Wow, what a dramatic twist at the recent Sabana REIT's Extraordinary General Meeting ("EGM") on 7th August 2023 which marked a historic milestone in Singapore REITs and the rise of shareholder activism. I was not expecting the removal of the REIT Manager motion to go through due to the unknown chapter that lies ahead in re-financing the bank loans over the next 1 year lead time while the REIT's Trust internalise the REIT Manager. Imagine the moment when the voting result was revealed with 55.6% of unitholders votes casted to get the motion through- the sponsor ESR Group must have been utterly stupefied at that juncture with their worst nightmare coming through.

1. Sabana unitholders to be commended
I am absolutely impressed by the fighting spirit of existing unit-holders who voted for the removal of the current Manager. ESR Group had previously made a low ball offer to buy-out Sabana REIT at S$0.31 per unit (current trading price is at S$0.405 per unit). The resolute stand that they took to remove the manager, which is more interested in their Sponsor's interest, rather than objectively for the rest of the unit-holders is commendable. Well done! The EGM has proven that size doesn't matter, it's the Heart and Courage of retail investors that matters. 

2. Sponsor taught a great lesson not to treat unit-holders as "Carrot Head"
The low ball offer and value destructive merger leaning heavily towards the interest of ESR Group is simply shameful and deplorable. Through control of the REIT Manager, they tried to present it as a fair and reasonable M&A deal in 2020. The historic moment that transpired at Sabana REIT's EGM will resonate through all Singapore REITs. Sponsors now need to open their eyes to the adverse consequences from making low ball offers or unfair deals that are prejudicial to the interest of other minority unit-holders. They may lose the lucrative management fees of a REIT Manager if they persist in such unfair dealings. 

Parting thoughts
Quarz Capital had once again made their mark as an activist investor against Goliath. Quarz had also made a strategic and smart move to ask existing staff of the REIT Manager to stay on and dangled an improved remuneration package- this brilliantly takes care of the continuity issue of daily operations and accounting. 


  1. Looking forward to see how internalisation affects the REIT. Will probably take a year to settle the administrative work, and another year or two to see how the move bears fruit. Let's see if the results cause a domino effect in the SGX REIT landscape!

    1. Hi PL, Happy National Day and thank you for your service to safe guard our country! :)
      I agree wholly with you and would like to see the results bearing fruit in the foreseeable future which offers another better alternative to how a REIT can be run. I like the way you put it with the possible "Domino Effect" on the SGX REIT landscape with this move by Sabana to internalise their REIT Manager.

    2. Hi Blade! Happy National Day to you too! One thing I noted mentioned by others is the potential conflict of interest between the internal management vs ESR as a sponsor. Will ESR continue to show support if their management team is kicked out?