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Sabana Shari'ah REIT
27-11-2017, 05:51 PM,
Post: #921
RE: Sabana Shari'ah REIT
REITs are pretty much a "take it or leave it" investment case. This is mainly due to the special features of the REIT structure, namely the requirement to distribute most of the cash earnings to the unitholders, the need to obtain unitholder approval to change the fee structure, and the underlying assets being real estate which has a low return on capital.

This means that a change of control via an acquisition of a large minority stake is normally uneconomic: most of the cash is leaked to OPMI, you can't increase your fees without OPMI approval, and you can't juice up returns sufficiently because the underlying assets are low-return.

The effect is that incumbent REIT managers are in an excellent position to abuse unitholders. To date most REIT managers have been careful about the extent of the abuse as they know that if the REIT is punished too hard, it will trade at a large discount and it cannot raise money any more. So usually there is some meat left on the table so that the deal is (eventually) DPU-accretive.

Sabana is perhaps the exception that proves the rule as the deals were extremely DPU-negative over the long term. The abuse has been so large and so sustained that there is little hope of saving the REIT in its current form.

In some ways it resembles the "Dead Man Fund" run by William A. Steadman, described here:

Essentially Steadman managed the funds so poorly that investors lost almost all their money. He had a captive board of trustees who did nothing while he churned the accounts and destroyed capital. But many investors stayed, because they were dead and couldn't redeem. To make things worse, since the dead investors' accounts were "inactive" they did not get account statements, so heirs didn't even know the accounts existed, and Steadman continued to drain the accounts.

The regulators? The SEC realized something was wrong as early as 1971, but it was only in 2012 that it shut the business down - 15 years after Steadman himself died. His daughter took over in 1998, but she didn't do any better - the funds lost 99% of their value under her watch.

Moral(s) of the story:

1. Principal-agent conflict: if the agent is unethical enough you will lose a lot of money. A Russian proverb made popular by Ronald Reagan: trust but verify.

2. Don't expect the government to protect you. By the time the bad guy is stopped, the damage has been done.

As usual, YMMV.
I do not give stock tips. So please do not ask, because you shall not receive.

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27-11-2017, 10:51 PM, (This post was last modified: 27-11-2017, 10:52 PM by opmi.)
Post: #922
RE: Sabana Shari'ah REIT
^^^ a bit OT: <<< funds like that should be put to sleep long time ago. see inception date and returns since inception.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster

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30-11-2017, 03:46 PM,
Post: #923
RE: Sabana Shari'ah REIT

Is there any difference between sabana sukuk bonds Vs the usual non sukuk bonds?

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12-12-2017, 04:12 PM,
Post: #924
RE: Sabana Shari'ah REIT
Countdown to CEO leaving office by year end. Hope it happen otherwise shareholder's ,including SSH, efforts go down the drain.

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26-12-2017, 07:04 PM, (This post was last modified: 27-12-2017, 09:27 AM by weijian.)
Post: #925
RE: Sabana Shari'ah REIT
They are given more that 6 months to find external replacement but to no avail.

Very doubtful that new CEO can turns around the Reit. Sian.

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27-12-2017, 09:29 AM,
Post: #926
RE: Sabana Shari'ah REIT
Don't expect much from the new CEO etc - ultimately all depends on what ESR+Tong Jin Quan + friendly forces decide to do with this - vibrant is now out-voted and does not have the financial power to compete.

Interesting space though in the SREIT-third tier players - ESR corporate actions should be rerating factor.

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