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(01-02-2017, 07:09 PM)weijian Wrote: (01-02-2017, 05:24 PM)VB Piglet Wrote: in order to do some of the stuff discussed, like kick out the manager or liquidate the REIT, I think you would need approvals from various parties like JTC or lenders to Sabana.
hi VB piglet,
May i check which rule is it covered under (need JTC approval) and which loan covenants (lenders to Sabana) does it fall under?
Based on my general knowledge (so I have not seen this in any of Sabana's documents) of industrial REITs, JTC and lenders, my educated guess is that JTC and lenders, would include this power with most REITs that they work with, in case the replacement manager is someone they cannot accept.
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We are sending the letter to Sabana on Monday. Thanks a lot for hosting us, especially those guys who travelled all the way to sign. Wish us luck.
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(02-02-2017, 06:48 PM)ACTIVIST SPEAKS Wrote: We are sending the letter to Sabana on Monday. Thanks a lot for hosting us, especially those guys who travelled all the way to sign. Wish us luck.
All the best in your endeavour . Keep us posted on the outcome , it is a good case study for all buddies here .
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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(02-02-2017, 01:00 AM)VB Piglet Wrote: (01-02-2017, 07:09 PM)weijian Wrote: (01-02-2017, 05:24 PM)VB Piglet Wrote: in order to do some of the stuff discussed, like kick out the manager or liquidate the REIT, I think you would need approvals from various parties like JTC or lenders to Sabana.
hi VB piglet,
May i check which rule is it covered under (need JTC approval) and which loan covenants (lenders to Sabana) does it fall under?
Based on my general knowledge (so I have not seen this in any of Sabana's documents) of industrial REITs, JTC and lenders, my educated guess is that JTC and lenders, would include this power with most REITs that they work with, in case the replacement manager is someone they cannot accept.
This is quote from the article in Strait Times, http://www.straitstimes.com/business/com...abana-reit,
" Mr Gerald added that investors should take note that some loan covenants could provide clauses that, if the Reit manager is changed, the loan will be recalled."
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"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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(02-02-2017, 08:45 PM)VB Piglet Wrote: (02-02-2017, 01:00 AM)VB Piglet Wrote: (01-02-2017, 07:09 PM)weijian Wrote: (01-02-2017, 05:24 PM)VB Piglet Wrote: in order to do some of the stuff discussed, like kick out the manager or liquidate the REIT, I think you would need approvals from various parties like JTC or lenders to Sabana.
hi VB piglet,
May i check which rule is it covered under (need JTC approval) and which loan covenants (lenders to Sabana) does it fall under?
Based on my general knowledge (so I have not seen this in any of Sabana's documents) of industrial REITs, JTC and lenders, my educated guess is that JTC and lenders, would include this power with most REITs that they work with, in case the replacement manager is someone they cannot accept.
This is quote from the article in Strait Times, http://www.straitstimes.com/business/com...abana-reit,
"Mr Gerald added that investors should take note that some loan covenants could provide clauses that, if the Reit manager is changed, the loan will be recalled."
hi VB piglet,
It is common to have covenants related to material changes of the debtors in the loan. I had thought you have had insider knowledge of the exact covenant. From Mr Gerald's tone (he used the word "could"), i reckon he is stating the common street knowledge too. Nonetheless, thanks for bringing this up to everyone's attention.
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http://www.mas.gov.sg/~/media/MAS/Regula...202016.pdf
From Page 82 of the Property Funds Appendix:
"Guidance 3
A loan agreement may contain ‘change of control’ covenant if (a) the covenant is required solely by lenders; (b) the covenant
can be waived with the consent of lenders; and © the covenant is disclosed in accordance with the listing requirements of a
securities exchange. A ‘change of control’ covenant refers to a condition in a loan agreement which makes reference to the
interests of any controlling unitholder or place restrictions on any change of control of the property fund and the breach of
such a condition or restriction will cause a default in respect of the loan agreement."
It would definitely be useful to know the exact covenant.
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02-02-2017, 11:12 PM
(This post was last modified: 02-02-2017, 11:16 PM by tonylim.)
(02-02-2017, 10:09 PM)owq Wrote: http://www.mas.gov.sg/~/media/MAS/Regula...202016.pdf
From Page 82 of the Property Funds Appendix:
"Guidance 3
A loan agreement may contain ‘change of control’ covenant if (a) the covenant is required solely by lenders; (b) the covenant
can be waived with the consent of lenders; and © the covenant is disclosed in accordance with the listing requirements of a
securities exchange. A ‘change of control’ covenant refers to a condition in a loan agreement which makes reference to the
interests of any controlling unitholder or place restrictions on any change of control of the property fund and the breach of
such a condition or restriction will cause a default in respect of the loan agreement."
It would definitely be useful to know the exact covenant. Rather sure , the manager will want the covenant of the loans to their advantage .
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Risk Factors:
Page 49 & 50 of IPO Prospectus:
Neither Sabana Shari’ah Compliant REIT nor the Manager has an established operating history.
Sabana Shari’ah Compliant REIT was constituted on 29 October 2010 and the Manager was incorporated on 15 May 2010. Neither Sabana Shari’ah Compliant REIT (as a REIT) nor the Manager (as the manager of the REIT) has the relevant operating histories by which their past performance may be judged. This will make it more difficult for investors to assess Sabana Shari’ah Compliant REIT’s future performance. There is no assurance that Sabana Shari’ah Compliant REIT will be able to generate sufficient revenue from operations to make distributions or that such distributions will be in line with those set out in “Profit Forecast and Profit Projection”.
If the CMS Licence of the Manager is cancelled or not renewed by the MAS, the operations of Sabana Shari’ah Compliant REIT will be adversely affected.
The capital markets service licence (“CMS Licence”) issued to the Manager is subject to conditions and is valid until 30 September 2013 unless otherwise cancelled or renewed. If the CMS Licence of the Manager is cancelled or not renewed by the MAS, the operations of Sabana Shari’ah Compliant REIT will be adversely affected.
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In 2010, the Manager has no relevant operating histories by which its past performances may be judged.
Question:
What were the criteria for granting the license then?
Now, the Manager has accumulated enough operating histories by which its past performances could be judged.
Question:
What are the criteria for renewing the license now?
No performance histories – license granted
Poor performance histories – license renewed
_____________________________________________________________________
Page 67 : Offer Information Statement dated 30 December 2016 (Rights Issues)
There may be disagreements between the shareholders of the Manager.
The Manager is currently wholly-owned by SIP, of which SIP is 51.0% owned by the Sponsor, 45.0% owned by Blackwood and 4.0% owned by AACP. Prior to their joint venture in relation to the Manager, none of Blackwood, AACP and the Sponsor had any business relations. Disagreements may occur between SIP, Blackwood, AACP and/or the Sponsor regarding the business and operations of the Manager which may not be resolved amicably and which may adversely affect the business operations of the Manager. This may in turn have an adverse impact on the results of operations of Sabana REIT.
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What exactly is the definition of “change of control” ?
Control of what ?
Control of number of units in the trust or the number of shares in the the Manager (the Management Company)?
What if a new SSH emergerd and holds more units than the current sponsor? Would this be deemed as “change of control”, assuming the Manager remains unchanged?
The consequences of “the Manager being removed by unit-holders” or “the Manager’s lcense not being renewed by MAS” are the same – new Manager is needed.
Should MAS be warned to take note as well of possible breach (of loan covenants) of a Reit if its Manager's license is not to be renewed?
It is obvious that the inclusion of the clause “Removal of the Manager = breach of loan covenant” would certainly make “change of the Manager” a harder exercise. In another words, it is to the advantage of the Manager. If no prior approvals have been obtained from unit-holders (or trustee) to include such a clause – wouldn’t this act be considered “a breach of trust” on the part of the Manager?
Loan agreements are signed by the trustee and not by the Manager - would trustee allowed such a clause to be included in the first place?
___________________________________________________________________________________________________
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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