Quarz sees 'empty threats' on Sabana Reit's latest criticisms

Sabana Industrial Reit called Quarz's proposals as incomplete and unclear.

Investor Quarz claimed that Sabana Industrial Reit is "resorting to empty threats and fear mongering to protect the latter's own interest."

"Instead of addressing the potential serious corporate governance flaws and continued underperformance, the External Manager’s responses are useless, self-serving and unconstructive," it said in an email sent to Singapore Business Review.

Amongst Quarz's proposal is for Sabana to practice an internalisation of the Reit manager.

Quarz said "setting up a new Internal Manager, unitholders are effectively transferring significant value from ESR Group to Sabana unitholders."

"The Internal Manager Model is nothing new. It is in fact the standard model in most developed REIT markets such as US and Australia where more than 90% of all REITs are managed by Internal Managers," it said.

"Whilst an Internal Manager works to increase the DPU and unit price of unitholders, an External Manager tends to serve the interest of its owner, the Sponsor, by increasing its profitability where possible," it added.

The investor's comments stemmed from the Sabana Industrial Reit's bourse filing that Quarz's requisition notice and resolutions "are incomplete, lack clarity and fail to outline the many inherent risks in execution which ought to have been clearly disclosed to provide Unitholders with a balanced picture of its proposals." 

The real estate firm also said the "proposed internalisation of the REIT manager is a complex process that will take substantial amount of time and resources to effect, with considerable uncertainty and many inherent risks."

Sabana Industrial Reit even warned unitholders that Quarz did not assure unitholders that its proposals are viable and will not destroy value in the potentially unstable transition should the manager be removed.