Investors campaigning for removal of trust manager

A group of investors in Sabana's Syariah-compliant Reit is so angry at the firm's lacklustre performance that they have started a campaign to have the trust's manager sacked.

It is the first concerted push by retail investors here to have a Reit manager fired.

They want to kick out Sabana Real Estate Investment Management, which collects multi-million dollar fees every year, and replace it with an "in-house" management team that is better aligned with unit holders.

One disgruntled investor is Mr Koh Yee Kan, who bought into the Reit at an average price of about $1, only to see the units fall steeply, closing at 37 cents yesterday.

Mr Koh told The Straits Times: "In the last few years, the manager has purchased a number of properties at high prices that don't really add a lot of value to the company, and management is able to bypass unit holders most of the time."

Investors were also vexed by the Reit's decision last month to buy three properties in Eunos and Changi for $77.5 million and fund the deals by a dilutive rights issue.

The Reit manager said increasing the number of units would be good for trading liquidity, but the price fell off a cliff after the rights issue was announced on Dec 20.

That was when investors swung into action, coalescing on investment forums and a Telegram chat group.

Unit holders can vote to remove the Reit manager at a meeting convened by the trustee or manager if at least 50 unit holders or unit holders representing no less than 10 per cent of the total units issued request such a meeting.

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Mr Jerry Low, a semi-retired stock broker, said 62 people who are willing to request such a meeting have come forward. They plan to deliver a letter to the Reit manager next month.

If the trustee and manager do not thwart the request to meet, then a simple majority of those present is needed to vote for change. But investors face an uphill task.

Phillip Capital analyst Richard Leow said: "All bets are off, if a general meeting does not materialise. This is the key uncertainty, as there has not been any recent precedence for a call to remove a manager."

Then there is the question of retail investor fragmentation.

The sponsor, manager and related entities held 12.14 per cent of the Reit as at Dec 23, while Chinese property tycoon Tong Jinquan controlled 8.35 per cent. The rest of the shareholding is fragmented.

A spokesman for Sabana Real Estate Investment Management declined to comment.

marilee@sph.com.sg


This article was first published on Jan 25, 2017.
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