‘Period of uncertainty’ awaits Sabana REIT unitholders after manager’s removal: ESR Group

More than half (57.5%) of unitholders voted for the removal of Sabana’s manager.

ESR Group has expressed disappointment over the approval of the resolution to remove Sabana REIT’s manager.

In a statement, ESR Group said unitholders of the REIT will have to “endure a period of uncertainty about how Sabana REIT will be managed in future.”

The group added that the manager’s removal will also “create pressure on the value of Sabana REIT and may call into question its long-term future.”

Following the approval of both resolutions, ESR Group expects the REIT’s trustee to “quickly appoint appropriate advisors and come up with a comprehensive plan and next steps to safeguard the interests of all unitholders, setting out the timelines and cost estimates for each step to minimise the period of uncertainty and any adverse risks in the process of implementing internalisation.”

“Unitholders should bear in mind that all expenses to be incurred by the Trustee to formulate and implement the plan will be borne by Sabana REIT,” ESR added.

Quarz, on the other hand, said the result of the extraordinary general meeting is a "historic victory for all unitholders of S-REITs."

"We strongly believe that the result of the EGM sets a strong precedence and will increase the accountability of REIT managers to unitholders, resulting in better performance of the S-REIT sector," Quarz said in a statement sent to Singapore Business Review.

“We thank all unitholders for their overwhelming support for the internalisation. Once the internalisation is completed, all unitholders will fully own the new internal manager, which will be completely aligned with their interests. By returning the profit before tax of approximately $2.4m of the current external Manager back to unitholders, Sabana’s DPU is projected to grow by more than 7% for all unitholders. Unitholders also could benefit from potentially more than $40m of cost savings over the next 10 years if Sabana was to grow by just 50%," Quarz added.