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SABANA REIT

QInvestor
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01-Aug-2023 10:05     
 
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 Alert Admin 		I posted this question at the Quarz Webinar but did not get a response from Quarz:
"You have referenced the Croesus Retail Trust internalisation as an example for Sabana REIT to follow. How does your proposed approach to internalisation differ from that of Croesus Retail Trust? Please provide details of the Croesus internalisation. Thank you."

I googled and found that the Croesus Manager was not removed but acquired by Croesus Retail Trust.
"On 12 June 2016, Croesus Retail Trust (SGX: S6NU) (CRT) shocked the market when the trust announced it intended to acquire its manager for S$50 million. This will be the first of its kind in Singapore where a property trust is an internally-managed investment vehicle. As the proposed deal required unitholders? approval, an extraordinary general meeting was carried out on Thursday, 30 June 2016."

This means the Croesus internalisation was done without any disruption to Croesus business and operations.
The Quarz resolutions, if passed, effectively means that the shareholders are firing everyone who is running Sabana Reit - from the Board, CEO, CFO, HR Head down to the staff working for the Property Manager. Sabana Reit will have to re-hire every single position.
Quarz has provided assurances that there is no risk of disruption as they expect the current Sabana Manager to continue while the internalisation process is still underway.
IMHO, this is wishful thinking - Quarz talks about entities/organisations without any regard for the employees involved - people who are working for a living. Once Sabana shareholders vote to remove the Manager, many of these employees will be looking out for new jobs - do not expect the Manager to backfill any resigned position.
Quarz has proposed resolution 2 which directs the Trustee (i.e. HSBC Institutional Trust Services) to take on the mammoth task of executing this internalisation.
Take note that it is not just people who need to be rehired. Governance and processes all need to be put in place. Sabana Reit is currently an entity with no one directly on its own payroll.
In my opinion, Sabana shareholders will be writing several blank cheques if we pass resolution 2.
Take note that most Reits in Singapore do not operate with an internal manager. If the resolutions are passed, Sabana REIT will be plunged into a black hole. While Sabana is in this black hole, it is very likely tenants will not be renewing their leases.
Quarz has made claims about cost savings based on their assumptions and provided assurances for which they are not the action owners.
I for one do not believe the Quarz resolutions will work and I will not put my investment in Sabana at risk.

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luckyplate
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01-Aug-2023 09:03     
 
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 Alert Admin 		Done that ... Been There ...Now waiting in the operating centre.... where is the Doc ??

sealTeam3      ( Date: 31-Jul-2023 21:28) Posted:

Once internalized, the REIT manager will be owned by all unitholders.... not any single entity... 

True unitholders know who are going around spreading lies and fear... 

Let' s all vote for both resolutions! 

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gohmengt
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31-Jul-2023 21:54     
 
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 Alert Admin 		funny guy forgot cost of 2.5m for failed lowball merger? Who take it? ESR? Cmpon
If unitholder did not vote down general mandat, you wld be crying in corner cuz ESR made already placements and rights, maybe go look at ESR-REIT performance, " no placement" BOOM 300m placemenet! Who wins with internalization=? Quarz ? Cmon 
Fact is, esr cld have solved this ling time aggo, make proper offer in 2020 or after, problem sovled

moonsun      ( Date: 31-Jul-2023 12:06) Posted:

Since you also agree that internalisation alsp gd for ESR and wake them up, then there no doubt internalisation is way to go.. :) great in the end you also agree..


luckyguy3      ( Date: 30-Jul-2023 22:28) Posted:

Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 
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sealTeam3
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31-Jul-2023 21:28     
 
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 Alert Admin 		Once internalized, the REIT manager will be owned by all unitholders.... not any single entity... 

True unitholders know who are going around spreading lies and fear... 

Let' s all vote for both resolutions! 
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GoldenPig
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31-Jul-2023 18:24     
 
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 Alert Admin 		Yes, we wouldn' t want it to end up like George Orwell' s Animal Farm.
Where the human farmers = ESR, and the pigs = Quarz. 😂  
Just a change of exploiters .....

luckyguy3      ( Date: 31-Jul-2023 15:33) Posted:

Yes If the internalisation works. But at the moment all are assumptions. IF internalisation works, time for ESR-LOGOS to go the same way.

BUT at the same time, u all cannot put 100% trust in Quarz. Instead of wasting effort attacking ESR, no point attacking ESR already since 99.9999% the EGM
going to be successful. So why not channel ur energy and make sure Quarz fulfil their side of bargain by making sure they actually looking for good internal manager.

Imagine Quarz ask the ex-CEO of SPH, the umbrage Ng Yat Chung to lead the internal manager, u all ok with it? And then if Quarz with Volare as majority shareholder go ahead
with engaging Ng, how? 

moonsun      ( Date: 31-Jul-2023 12:06) Posted:

Since you also agree that internalisation alsp gd for ESR and wake them up, then there no doubt internalisation is way to go.. :) great in the end you also agree..


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luckyguy3
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31-Jul-2023 15:33     
 
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 Alert Admin 		Yes If the internalisation works. But at the moment all are assumptions. IF internalisation works, time for ESR-LOGOS to go the same way.

BUT at the same time, u all cannot put 100% trust in Quarz. Instead of wasting effort attacking ESR, no point attacking ESR already since 99.9999% the EGM
going to be successful. So why not channel ur energy and make sure Quarz fulfil their side of bargain by making sure they actually looking for good internal manager.

Imagine Quarz ask the ex-CEO of SPH, the umbrage Ng Yat Chung to lead the internal manager, u all ok with it? And then if Quarz with Volare as majority shareholder go ahead
with engaging Ng, how? 

moonsun      ( Date: 31-Jul-2023 12:06) Posted:

Since you also agree that internalisation alsp gd for ESR and wake them up, then there no doubt internalisation is way to go.. :) great in the end you also agree..


luckyguy3      ( Date: 30-Jul-2023 22:28) Posted:

Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 
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moonsun
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31-Jul-2023 12:06     
 
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 Alert Admin 		Since you also agree that internalisation alsp gd for ESR and wake them up, then there no doubt internalisation is way to go.. :) great in the end you also agree..


luckyguy3      ( Date: 30-Jul-2023 22:28) Posted:

Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 

luckyguy3      ( Date: 30-Jul-2023 22:21) Posted:

I think u all can get ready to pop the champagne. I still think Quarz does all these for their own benefit and not so what they called fighting for u, the minority shareholders (seriously do u all really think they doing all these for u?). Imagine if this internalisation goes wrong, dun expect Quarz to bill u all out, they may be the first one to sell before the ship sinks if the internalisation goes wrong. So I think u all are too trusting of Quarz even if ESR is not angel themselves. U all should also question Quarz during the EGM too and not just give them the blank cheque. If given the blank cheque they may turn into another ESR next time. 

With Volare voting with Quarz, is 99.9999% the EGM going to pass the 2 resolutions. With this in mind, ur focus now is not to attack ESR already, u should instead shift ur attention to Quarz and sort of hold Quarz responsible for the internalisation and hold them to some form of accountability and demand they give a status report to all shareholders monthly.

Refer to the following article. Volare voted with Quarz. So foregone conclusion the EGM is going to be passed.
http://sg.style.yahoo.com/esr-group-files-injunction-restrain-052125244.html


 


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cobrajr
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31-Jul-2023 00:39     
 
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 Alert Admin 		Confirmed 110% must vote them out. If what is said by Quart is not true, I'm sure the current management will take legal action. Anyway I've already lost alot in tis counter, and if lost some more oso I don't mind the gamble. Just vote resolution 1 & 2
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sangsang1
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31-Jul-2023 00:29     
 
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 Alert Admin 		last few days to finally vote and make a break with ESR.
if we don' t vote and break with it now, who knows, probably will have rights and placement soon so that the manager can buy properties again to increase fees

sangsang1      ( Date: 31-Jul-2023 00:27) Posted:

luckyguy3, please stop spreading rumours.
now, ESR own 100% of the manager. all the profit will go to ESR. the sabana manager now has a blank cheque, as we see in the last agm, they can appoint any director they want, unitholders has no power
but after internalisation,  the new internal manager will be owned by all shareholders. if you own 10% of the reit, you own 10% of the manager. Even ESR will own 20% of the internal manager. all the profit of the manager goes to all shareholders.

  most important thing is the manager will concentrate on making dividend and share price go up and have no need to make any more fees for its sponsor by doing rights and placement and do acquisitions. 





   
 

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sangsang1
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31-Jul-2023 00:27     
 
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 Alert Admin 		luckyguy3, please stop spreading rumours.
now, ESR own 100% of the manager. all the profit will go to ESR. the sabana manager now has a blank cheque, as we see in the last agm, they can appoint any director they want, unitholders has no power
but after internalisation,  the new internal manager will be owned by all shareholders. if you own 10% of the reit, you own 10% of the manager. Even ESR will own 20% of the internal manager. all the profit of the manager goes to all shareholders.

  most important thing is the manager will concentrate on making dividend and share price go up and have no need to make any more fees for its sponsor by doing rights and placement and do acquisitions. 





   
 
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luckyplate
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30-Jul-2023 23:58     
 
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 Alert Admin 		there will be some who are ...against internal .. There are pros and cons ..
so . i am fine even if the thing does not get pass ... there is ready no loss ...anyway ..
 

Seventy      ( Date: 30-Jul-2023 22:45) Posted:

We voting to internalise the management. You talking about some imaginary usurp of ESR crown by Quarz. Are you sure u know what u are saying. Your blind faith is clouding your judgement and make you come up with strange stories

luckyguy3      ( Date: 30-Jul-2023 22:28) Posted:

Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 
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Seventy
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30-Jul-2023 22:45     
 
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 Alert Admin 		We voting to internalise the management. You talking about some imaginary usurp of ESR crown by Quarz. Are you sure u know what u are saying. Your blind faith is clouding your judgement and make you come up with strange stories

luckyguy3      ( Date: 30-Jul-2023 22:28) Posted:

Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 

luckyguy3      ( Date: 30-Jul-2023 22:21) Posted:

I think u all can get ready to pop the champagne. I still think Quarz does all these for their own benefit and not so what they called fighting for u, the minority shareholders (seriously do u all really think they doing all these for u?). Imagine if this internalisation goes wrong, dun expect Quarz to bill u all out, they may be the first one to sell before the ship sinks if the internalisation goes wrong. So I think u all are too trusting of Quarz even if ESR is not angel themselves. U all should also question Quarz during the EGM too and not just give them the blank cheque. If given the blank cheque they may turn into another ESR next time. 

With Volare voting with Quarz, is 99.9999% the EGM going to pass the 2 resolutions. With this in mind, ur focus now is not to attack ESR already, u should instead shift ur attention to Quarz and sort of hold Quarz responsible for the internalisation and hold them to some form of accountability and demand they give a status report to all shareholders monthly.

Refer to the following article. Volare voted with Quarz. So foregone conclusion the EGM is going to be passed.
http://sg.style.yahoo.com/esr-group-files-injunction-restrain-052125244.html


 


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luckyguy3
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30-Jul-2023 22:28     
 
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 Alert Admin 		Do not let ur hatred for ESR blind ur senses and let Quarz have a blank cheque. U all should now focus on Quarz instead and put
in some measures to ensure Quarz will not become another ESR once they gain power after ESR is kicked out of the management.

Seriously all I read is ur hatred and attack on ESR and hailing Quarz as the hero. U all shd know once Quarz gains power after kicking
ESR out, they will have absolute power since I see most of u seem to treat them as hero and prepare to give blank cheque to them.

After thinking about it, I think If this internalisation of Sabana reit works, is good for ESR-LOGOS shareholders too. Because it either forces ESR 
to wake up their idea and improve ESR-LOGOS performace and thus share price and DPU/NTA and force them to stop the placement/rights issue nonsense which
only dilute the DPU and NTA and drive down share price, if not they will face the same call for internalisation from ESR-LOGOS shareholders and kick them out from
ESR-LOGOS.
 

luckyguy3      ( Date: 30-Jul-2023 22:21) Posted:

I think u all can get ready to pop the champagne. I still think Quarz does all these for their own benefit and not so what they called fighting for u, the minority shareholders (seriously do u all really think they doing all these for u?). Imagine if this internalisation goes wrong, dun expect Quarz to bill u all out, they may be the first one to sell before the ship sinks if the internalisation goes wrong. So I think u all are too trusting of Quarz even if ESR is not angel themselves. U all should also question Quarz during the EGM too and not just give them the blank cheque. If given the blank cheque they may turn into another ESR next time. 

With Volare voting with Quarz, is 99.9999% the EGM going to pass the 2 resolutions. With this in mind, ur focus now is not to attack ESR already, u should instead shift ur attention to Quarz and sort of hold Quarz responsible for the internalisation and hold them to some form of accountability and demand they give a status report to all shareholders monthly.

Refer to the following article. Volare voted with Quarz. So foregone conclusion the EGM is going to be passed.
http://sg.style.yahoo.com/esr-group-files-injunction-restrain-052125244.html


 

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luckyguy3
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30-Jul-2023 22:21     
 
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 Alert Admin 		I think u all can get ready to pop the champagne. I still think Quarz does all these for their own benefit and not so what they called fighting for u, the minority shareholders (seriously do u all really think they doing all these for u?). Imagine if this internalisation goes wrong, dun expect Quarz to bill u all out, they may be the first one to sell before the ship sinks if the internalisation goes wrong. So I think u all are too trusting of Quarz even if ESR is not angel themselves. U all should also question Quarz during the EGM too and not just give them the blank cheque. If given the blank cheque they may turn into another ESR next time. 

With Volare voting with Quarz, is 99.9999% the EGM going to pass the 2 resolutions. With this in mind, ur focus now is not to attack ESR already, u should instead shift ur attention to Quarz and sort of hold Quarz responsible for the internalisation and hold them to some form of accountability and demand they give a status report to all shareholders monthly.

Refer to the following article. Volare voted with Quarz. So foregone conclusion the EGM is going to be passed.
http://sg.style.yahoo.com/esr-group-files-injunction-restrain-052125244.html


 
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sangsang1
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30-Jul-2023 15:09     
 
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 Alert Admin 		Saw this on a group:

We welcome and invite all Sabana unitholders to join our Webinar on Monday 31st of July 2023 at 7.30pm
to understand how VOTING FOR Resolution 1 and 2 can increase DPU, unit price and corporate governance at Sabana REIT!
Unitholders will also fully own the Internal REIT Manager together!
We will comprehensively address that the manager' s claims are baseless, the internalization is well established with strong and legal safeguards to protect unitholders
Link to webinar: https://us02web.zoom.us/j/88970799227
(Meeting ID 889 7079 9227)
YouTube link to video: https://youtu.be/QAF0ttV-G2M
Please contact/whatsapp us: +65 8684 6968 for any assistance.

 
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RumbaRambo
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30-Jul-2023 11:57     
 
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 Alert Admin 		Totally agree. Let' s all vote for internalisation. Saves unitholders' money and aligns interest of unitholders and Reit manager. External manager acting on behalf of unitholders but making money for the sponsor..... What a nonsense!!! 
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mrwise
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29-Jul-2023 22:07     
 
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 Alert Admin 		Time to vote and support for Quarz!

sangsang1      ( Date: 28-Jul-2023 16:01) Posted:

Very well said!!  they are the one with no clear plans except maintaining the current reit manager and charging fees to unitholders... left so many properties empty and high vacancy until being forced by Quarz to increase ocuppancy...
If shareholders don' t remove them, 1 bad acquisition, merger or capital raising will destroy the share price like the last merger

sealTeam3      ( Date: 28-Jul-2023 01:14) Posted:

Until today, the manager and directors have never shown any remorse for what they did back then.. no apologies or explanation.. charging unitholders for the full costs of the merger and paying themselves big fat salaries..

And it seems that everytime Quarzt propose something, their sole purpose is just to reject and ridicule.

internal manager set up is so common elsewhere.. it cant be all bad right.. their only counterattack is that no clear plan, risks and uncertainties.. then why dont work with Quarzt to come up with a good plan? Didnt they claim their interest is fully aligned with unitholders ??



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RumbaRambo
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29-Jul-2023 20:39     
 
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 Alert Admin 		Big jokers. After they realized that shareholders are smart enough to know that the banks will continue extending loan to new manager, now they try to spin some false stories again. If the bank continues loan, then they will also keep the hedge. What a nonsense!!!

Joelton      ( Date: 29-Jul-2023 16:17) Posted:

Internalisation of Sabana REIT&rsquo s manager won&rsquo t result in cost savings, says ESR Group
 
In its latest open letter to the unitholders of Sabana REIT, ESR Group says an internalisation of Sabana REIT&rsquo s manager will not result in cost savings.
 
Once the higher debt costs are factored in, unitholders will be worse off, says the group, which is the largest unitholder in the REIT.
 
&ldquo If the manager is removed, Sabana REIT&rsquo s borrowing costs are expected to increase, without the backing of a strong sponsor for its unsecured facilities. Each increase of one percentage point (100 basis points) will cost unitholders an additional $3.0 million in interest each year which will reduce distribution per unit (DPU) by 0.27 Singapore cents,&rdquo warns the group. The estimate is based on Sabana REIT' s outstanding 1.102 billion units.
This goes against Quarz&rsquo s July 20 statement that Sabana REIT&rsquo s unitholders &ldquo can potentially save more than $40 million of fees they need to pay to the external manager over the next 10 years&rdquo . The activist investor adds that unitholders would reap &ldquo [i]mmediate cost savings of [around] $2.4 million per year&rdquo with the internalisation of the REIT manager.
 
The removal of the REIT manager may also trigger &ldquo an unwinding of the existing interest rate hedges which have been put in place&rdquo .
 
&ldquo If this is the case, the actual impact of one percentage point (100 basis points) will be even higher at $8.3 million in interest each year which will reduce DPU by 0.75 Singapore cents,&rdquo adds ESR Group.
 
In its letter, the group accused Quarz of gross overstating the net savings from the internalisation of the REIT manager, noting that the REIT manager only generated $1.26 million of profit in FY2021 out of the $5.14 million of fees it received from the REIT. This was from the &ldquo ongoing recurring operating cost of running the REIT&rdquo .
 
&ldquo Any potential cost savings out of the $1.26 million of profit generated by the Sabana REIT manager will be wiped out by the potential increase in borrowing cost and unitholders will be worse-off on an ongoing basis,&rdquo notes ESR Group.
 
&ldquo This further ignores the one-time costs associated with implementing the change which Quarz itself agrees is between $3 million &ndash $5 million. This could be higher as according to the trustee, it will need to appoint professional advisers (including investment, legal, financial, tax, property and other advisers),&rdquo it adds.
 
ESR&rsquo s letter, dated July 28, comes a day after Quarz issued a response to the group&rsquo s July 25 letter. In Quarz&rsquo s letter, it highlighted the dismissal of ESR&rsquo s injunction by the court to stop Sabana REIT&rsquo s extraordinary general meeting (EGM). The court also confirmed that the removal of the REIT&rsquo s manager is the &ldquo fundamental right&rdquo of unitholders in Singapore.
 
&ldquo We highly recommend unitholders to directly refer to the court papers instead of listening to opinions of parties which are potentially conflicted. In particular, we strongly reject ESR' s claim in paragraph 10 of its letter dated July 21 that the resolutions are not meant for the immediate implementation of internalization. The resolutions as tabled provide an unequivocal mandate for the trustee to execute the internalisation,&rdquo says Quarz.
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sangsang1
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29-Jul-2023 17:13     
 
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 Alert Admin 		From email, 
 


VOTE FOR Resolutions 1& 2 to build a better and stronger Sabana with higher DPU, unit price and corporate governance!

 


Immediate cost savings from internalization are potentially even higher than expected! 

While we have earlier forecasted an immediate $2.4million cost savings from internalization (7.2% jump in DPU), the cost savings to unitholders might be even more after the release of Sabana REIT manager&rsquo s 2022 financials. 

Sabana REIT Manager and its 100% owned property manager reported a total of $2.4million in Profit before Tax in 2022. The current salaries of key management (CEO, CFO, Head of Asset Management etc) is S$1.6 million which is almost 80% of total staff cost.   

By rightsizing the salaries and fees of key management and the directors who are paid one of the highest salaries among SGX-listed REITs, the cost savings can be potentially more than $2.8 million!!! This will now go to all unitholders after internalization! 

Given that the projected cost of setting up the new Internal Manager is around S$3-5million, it will potentially take less than 2 years of cost savings to fully pay for the new Internal Manager. Post this, unitholders will never have to pay any acquisition, divestment, or management fees again. 

The potential cost savings would become even more significant if Sabana were to grow its portfolio by just 50% over the next 10 years. By not having to pay any fees, the internalization would potentially result in more than S$40 million of cost savings for unitholders in the next 10 years. 

However, the true cost savings for unitholders is the complete alignment of interest of the internal manager. This ensures that no rights and placement will be done for potentially value destructive acquisitions done to boost acquisition, performance and management fees to the External Manager.

In the 21-year S-REIT history, banks have consistently extended support and not changed the loans and interest rate hedges in cases of REIT manager and/or manager ownership from our research. This is as the loans are fully backed by the REIT&rsquo s property portfolios. 

The External Manager has a mere S$5.3million of equity while Sabana REIT has a ~S$900 million  All-Singapore property portfolio. It is therefore &lsquo absurd&rsquo for the External Manager to claim that the bank loans and the hedges are are determined by the External manager when it' s clear that it is Sabana&rsquo s property portfolio owned by all unitholders that is really backing the loans and hedges. 

So funny, ESR paid vibrant 20m for just 50% of the manager, now trying to tell shareholders it doesnt make much profit.laughlaugh
who believe???? hahaahah
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Joelton
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29-Jul-2023 16:17     
 
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Internalisation of Sabana REIT&rsquo s manager won&rsquo t result in cost savings, says ESR Group
 
In its latest open letter to the unitholders of Sabana REIT, ESR Group says an internalisation of Sabana REIT&rsquo s manager will not result in cost savings.
 
Once the higher debt costs are factored in, unitholders will be worse off, says the group, which is the largest unitholder in the REIT.
 
&ldquo If the manager is removed, Sabana REIT&rsquo s borrowing costs are expected to increase, without the backing of a strong sponsor for its unsecured facilities. Each increase of one percentage point (100 basis points) will cost unitholders an additional $3.0 million in interest each year which will reduce distribution per unit (DPU) by 0.27 Singapore cents,&rdquo warns the group. The estimate is based on Sabana REIT' s outstanding 1.102 billion units.
This goes against Quarz&rsquo s July 20 statement that Sabana REIT&rsquo s unitholders &ldquo can potentially save more than $40 million of fees they need to pay to the external manager over the next 10 years&rdquo . The activist investor adds that unitholders would reap &ldquo [i]mmediate cost savings of [around] $2.4 million per year&rdquo with the internalisation of the REIT manager.
 
The removal of the REIT manager may also trigger &ldquo an unwinding of the existing interest rate hedges which have been put in place&rdquo .
 
&ldquo If this is the case, the actual impact of one percentage point (100 basis points) will be even higher at $8.3 million in interest each year which will reduce DPU by 0.75 Singapore cents,&rdquo adds ESR Group.
 
In its letter, the group accused Quarz of gross overstating the net savings from the internalisation of the REIT manager, noting that the REIT manager only generated $1.26 million of profit in FY2021 out of the $5.14 million of fees it received from the REIT. This was from the &ldquo ongoing recurring operating cost of running the REIT&rdquo .
 
&ldquo Any potential cost savings out of the $1.26 million of profit generated by the Sabana REIT manager will be wiped out by the potential increase in borrowing cost and unitholders will be worse-off on an ongoing basis,&rdquo notes ESR Group.
 
&ldquo This further ignores the one-time costs associated with implementing the change which Quarz itself agrees is between $3 million &ndash $5 million. This could be higher as according to the trustee, it will need to appoint professional advisers (including investment, legal, financial, tax, property and other advisers),&rdquo it adds.
 
ESR&rsquo s letter, dated July 28, comes a day after Quarz issued a response to the group&rsquo s July 25 letter. In Quarz&rsquo s letter, it highlighted the dismissal of ESR&rsquo s injunction by the court to stop Sabana REIT&rsquo s extraordinary general meeting (EGM). The court also confirmed that the removal of the REIT&rsquo s manager is the &ldquo fundamental right&rdquo of unitholders in Singapore.
 
&ldquo We highly recommend unitholders to directly refer to the court papers instead of listening to opinions of parties which are potentially conflicted. In particular, we strongly reject ESR' s claim in paragraph 10 of its letter dated July 21 that the resolutions are not meant for the immediate implementation of internalization. The resolutions as tabled provide an unequivocal mandate for the trustee to execute the internalisation,&rdquo says Quarz.
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