THE trustee of Sabana Industrial Real Estate Investment Trust (Sabana Reit) has identified and executed letters of intent with “preferred candidates” whom it intends to propose as directors and senior management of the Reit’s new internal manager.
This comes as part of HSBC Institutional Trust Services’ update to unitholders of the Reit on Monday (Aug 5), which outlined the latest indicative timeline for internalisation up to December 2024.
The updated timeline follows recent court rulings on an application by the trustee to clarify steps for the internalisation process, and a since-dismissed appeal by several ESR entities.
As the trustee of Sabana Reit, HSBC Institutional Trust Services said a draft of the new internal manager’s budget and operating plan has been created and will be presented to the new board of directors and senior management, following their appointments or commencement of employment.
It is also in the midst of applying for a capital markets services licence for the new internal manager.
Among other administrative matters, work for the licence application includes “addressing the fit and proper criteria” for its proposed directors and chief executive of the new internal manager, said the trustee.
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On Jul 23, the Reit manager reported a distribution per unit of S$0.0134 for the first half of its fiscal year ended Jun 30, down 16.8 per cent from S$0.0161 in the corresponding year-ago period.
Total income available for distribution came in at S$16.4 million, 8.2 per cent lower year on year, mainly due to higher finance costs from increased borrowings and higher borrowing costs.
The manager estimated total costs of about S$8.9 million incurred by both itself and the trustee from Jan 1, 2024, until Jun 30, 2024, in connection with the Reit’s internalisation process.
This comprised nearly S$1.9 million in expenses incurred by the manager and another S$7.1 million by the trustee, noted the former in its Jul 23 results presentation.
In its latest update to unitholders, HSBC Institutional Trust Services estimated that about 16 per cent or S$1.4 million of total costs had gone to relevant service providers, including for proposals for requisitioned resolutions, and convening additional extraordinary general meetings (EGMs) that were “not contemplated” in the trustee’s work plan.
Another 12 per cent or S$1.1 million was in connection to the Order 32 application and ESR’s appeal due to divergent views among unitholders deemed “fundamental to the progress of the internalisation as well as the trustee’s proposed path to internalisation”.
Finally, the trustee noted that about 15 per cent or S$1.4 million of total costs were incurred by both itself and the manager from pre-internalisation activities.
This includes but is not limited to legal costs incurred in the process of preparing for Sabana Reit’s EGM on Aug 7, 2023 – along with logistical costs of convening the event, noted HSBC Institutional Trust Services.
Units of Sabana Reit traded S$0.005 or 1.5 per cent lower at S$0.33 as at the midday break on Monday, prior to the trustee’s latest announcement.
