Sabana Shari'ah REIT

plan is quite clear although the manager keep trying to confuse and scare shareholders. can see where its interest is. Very desperate attempt to save the sponsor.

Even after resolutions pass, current manager would still stay in place due to regulation and restrictions. 
 
Trustee would then setup, and license manager. cost estimated around 3-5m which is about 2 years of cost savings of removing manager. but shareholders will get to enjoy forever savings

Once internal manager fully setup, most people from old manager will cross over because old manager will shut down due to no money once it gets removed.

Internal manager will take over management of the Reit once its ready.

Loans will have no issues. my friends who work in loans department all laughing at the reit manager. everyone knows loans are backed by properties not manager. 

manager is just a 2-3m company. who cares who is the manager, just like who cares who the property agent is when bank gives loan.

will vote yes for higher share price and dividend and ownership in the manager

My main gripe about Trust structure is that the Trustees are passive and not taking care of the interest of the beneficiary. Remind me there was a trust that sold a property and all 3 quotes were same price or something? Trustee didn't even blinked at the coincidence.

Think Trustees should be liable for breach of fiduciary duties and that will change the Trust landscape

(23-07-2023, 10:24 PM)specuvestor Wrote: My main gripe about Trust structure is that the Trustees are passive and not taking care of the interest of the beneficiary. Remind me there was a trust that sold a property and all 3 quotes were same price or something? Trustee didn't even blinked at the coincidence.

Think Trustees should be liable for breach of fiduciary duties and that will change the Trust landscape

I think Trustee is only responsible for setting up the Internal Manager. 

Once fully setup, Internal Manager will run the REIT for shareholders who are the owners. old manager will be fired and cost savings given back to shareholders in higher DPU.

Shareholders will vote in directors who will manage the REIT, like a normal company. But because its not owned by sponsor, the internal manager main incentive is to increase DPU and share price.

Unlike External manager who wants to increase management, acquisition and divestment fees resulting in placement and rights.

(24-07-2023, 12:04 AM)steadyvalue Wrote:

(23-07-2023, 10:24 PM)specuvestor Wrote: My main gripe about Trust structure is that the Trustees are passive and not taking care of the interest of the beneficiary. Remind me there was a trust that sold a property and all 3 quotes were same price or something? Trustee didn't even blinked at the coincidence.

Think Trustees should be liable for breach of fiduciary duties and that will change the Trust landscape

I think Trustee is only responsible for setting up the Internal Manager. 

Once fully setup, Internal Manager will run the REIT for shareholders who are the owners. old manager will be fired and cost savings given back to shareholders in higher DPU.

Shareholders will vote in directors who will manage the REIT, like a normal company. But because its not owned by sponsor, the internal manager main incentive is to increase DPU and share price.

Unlike External manager who wants to increase management, acquisition and divestment fees resulting in placement and rights.

Honestly a REIT is not about internal or external manager running the operations. The structure, including the trustees are important too. You also do realise that ESR is also the biggest shareholder of the REIT right, and that directors are not there to manage the REIT or Company?

(25-07-2023, 10:17 AM)r0n Wrote: Honestly a REIT is not about internal or external manager running the operations. The structure, including the trustees are important too. You also do realise that ESR is also the biggest shareholder of the REIT right, and that directors are not there to manage the REIT or Company?

Indeed, a REIT is not about internal or external manager running the operations. What really matters to the REIT owners is whether the manager creates value for everyone and has/behave with no conflict of interest. It is now up to the shareholders to decide - fair and square and probably that is how it should work? Imagine someone trying to call off elections, rather allow the elections to be held to decide the results. If this happens to the political scene, what goes?

ESR is the biggest shareholder of the REIT, no questions there too. But been the biggest shareholder doesn't mean it is/has to be aligned to other shareholders (mainly the OPMIs). Extracting value can come in many ways and if everyone is not extracting value in the same way, or someone is deemed as taking unproportionally more, then the result is simply what has transpired.

From the almost every year placements and rights at ESR Logos REITs, the high leverage of Suntec REIT, and the weak performance of ESR logos, Suntec and ARA US hospitality REIT, i think it is clear what ESR's interest is


So far, voting No to stay far away from the ESR family (such as the 2020 merger) has benefited the sabana shareholders

I think Sabana unitholders have a great opportunity to now choose whether it wants to be part of ESR managed REITs, or permanently delink itself from ESR and make its own future. 

Abit nostalgic given national day is coming 

If ESR cares about Sabana's future, it should help the internalisation succeed. The fact that it tried to stop the EGM (and failed), shows that it probably cares more about the management fees and control than anything else.

If Trustee is only responsible for setting up the Internal Manager then they should just get a single upfront fee. They have a fiduciary duty receiving recurring fee to act on behalf of the beneficiary which is the unit holders.

Like r0n mentioned, this is not a company with directors. There is actually no shareholders in the Trust and if I am not wrong it is not under the Companies Act. The Trust structure is that the assets are held under the Trust entity which the Trust will manage on behalf of the beneficiary, including appointing a Manager. Hence the Trustee better have a good idea whether the Manager that they appointed is doing a good job, rather than stay passively silent.

It is governed by Trust law and the Trust has to be equitiable to all the beneficiaries not just the major beneficiaries. Think of it this way that you set up a Trust for your children with 50% going to eldest and 25% for your second and third child. The Trustee has to make sure that the 2nd and 3rd child are not marginalised even though the eldest has a bigger say on who to appoint as the manager or disposal etc.

(24-07-2023, 12:04 AM)steadyvalue Wrote:

(23-07-2023, 10:24 PM)specuvestor Wrote: My main gripe about Trust structure is that the Trustees are passive and not taking care of the interest of the beneficiary. Remind me there was a trust that sold a property and all 3 quotes were same price or something? Trustee didn't even blinked at the coincidence.

Think Trustees should be liable for breach of fiduciary duties and that will change the Trust landscape

I think Trustee is only responsible for setting up the Internal Manager. 

Once fully setup, Internal Manager will run the REIT for shareholders who are the owners. old manager will be fired and cost savings given back to shareholders in higher DPU.

Shareholders will vote in directors who will manage the REIT, like a normal company. But because its not owned by sponsor, the internal manager main incentive is to increase DPU and share price.

Unlike External manager who wants to increase management, acquisition and divestment fees resulting in placement and rights.

https://links.sgx.com/FileOpen/Quarz%20O...eID=766682

Quarz analogy in their letter really crush the manager's scare tactics:

A property owner purchased a S$1million property and paid for most of it in cash, with only a small loan of $325,000 remaining. He hires a manager to take care of the property (leasing, maintenance, periodic refinancing of the loan). 

However due to the bad performance of the manager, the owner decides to fire the manager and to manage the property on its own. The manager, in a bid to prevent itself from being fired, comes up with ‘scare tactics’ and the ‘absurd claim’ that if he was fired, the bank would recall its loan and the property might need to be force sold. 

This manager’s claims are clearly absurd, false and misleading. It is completely clear that the loan is backed by the owner’s property and not the manager.

REITs are evergreen investment vehicles and some of the best clients for the banks as they pay interest to the banks forever. Sabana pays more than S$11 million of interest per year. We believe that Sabana’s bankers would hate to lose a good client such as Sabana REIT to their more than 15 other competing banks.

Getting clearer by the day that the manager is just spinning nonsense in order to scare unitholders to keep their fees.    shameful!!

It's a bit more complicated than that. Like I mentioned above, the property owner doesn't own the property. It's actually the Trust. And I haven't bothered to read the loan covenants but there can be a change of control or manager clause to protect the bank.

But yes the Trustee should be more proactive and should at least have an opinion whether the manager is good and in the extreme case exercise discretionary right to replace the manager if it is not.

The trustee is as usual just passively waiting for instructions and keep mum, forgetting it's paid recurring for its fiduciary duty to the many beneficiaries.

When it comes to the crunch Structure becomes most important.