Sabana Shari'ah REIT

[weijian]

What was particularly interesting in Quarz webinar was the future potential of the internal manager to be a platform and manage other property portfolios and earn even more fees for all unitholders. Like Capitaland and Keppel.

Hi steadyvalue,

Take note that there is a difference between asset manager and property manager. The asset manager manages the AUM (buy/sell/enhancement decisions etc). The property manager manages the property (collect maint fees/manages tenants/upkeep property etc)

So it might get messy if we are taking about Asset Manager here (it becomes the same situation as ESR manager managing different industrial REITs, resulting in potential conflict of interest). As for property manager, it is probably ok as it is mainly dealing with the operations, not the decision making stuff that the Asset Manager is responsible for.

[steadyvalue]

What was particularly interesting in Quarz webinar was the future potential of the internal manager to be a platform and manage other property portfolios and earn even more fees for all unitholders. Like Capitaland and Keppel.

Hi steadyvalue,

Take note that there is a difference between asset manager and property manager. The asset manager manages the AUM (buy/sell/enhancement decisions etc). The property manager manages the property (collect maint fees/manages tenants/upkeep property etc)

So it might get messy if we are taking about Asset Manager here (it becomes the same situation as ESR manager managing different industrial REITs, resulting in potential conflict of interest). As for property manager, it is probably ok as it is mainly dealing with the operations, not the decision making stuff that the Asset Manager is responsible for.

Totally agree with you. probably they are talking more about property management and if its for asset management, they probably need to go for another sector and not industrial

but its interesting profit making opportunities which can increase income for unitholders

[weijian]

Totally agree with you. probably they are talking more about property management and if its for asset management, they probably need to go for another sector and not industrial

but its interesting profit making opportunities which can increase income for unitholders

Hi steadyvalue,
The property mgt business, while parallel, is a totally different ball game when it comes to competition. We can look at the property mgt BU set up by the locally listed property agencies and we can see that it isn't going anywhere, at least when compared to its brokerage business.

I am not saying that it wouldn't go anywhere but comparing it to Capitaland/ Keppel is probably too far fetch as these folks have a huge captive AUM (10-20x more than Sabana) for their property mgt business to do. This business has to scale in a small market like Spore, for it to make money (ie. centralize the office/backend functions like accounting etc).

Personally, I think the best argument is probably the potential cost savings and removal of "potential" conflict of interest. The latter can actually allow an orderly liquidation of the REIT - which may be the best path to maximize value for shareholders?

[r0n]

Very interesting set of news articles from the past few days about Sabana REIT

SIAS noted that internalisation of a Reit manager is “neither tested nor proven in Singapore”

Glass Lewis and Institutional Shareholder Services (ISS) were both against the second resolution brought forward by Quarz Capital in view of uncertainties and adverse consequences that could potentially arise.

Wonder how the EGM will turn out in the end?

[steadyvalue]

SIAS, Glass Lewis and ISS all supported the merger the last time and we all know how it went 

Ask sabana manager  how much they have paid SIAS to hold their events over the last few years?   

These service providers usually just follow director's recommendation.
This time round, ISS actually asked shareholders to vote yes for resolution 1 to remove sabana manager which shows that it also sees big problem of sabana manager.

Easy to see where everyone's interest lies
Manager and ESR want their manager to be kept and continue earning fees so will say all the bad stuff about internalisation.  They have a blank cheque now and can do anything they want. Even try to stop the egm.

Quarz is always voting for ways to increase dividend and share price like what they have done to vote down the lowball merger and new issue mandate.
If you read their papers, they plan is very clear. their worries that sabana will end up like esr managed reits like suntec and esr logos if nothing is done is very real.

 internalisation is good for shareholders as it diverts all the manager profit back to shareholders. 

i vote yes for internalisation.

[ghchua]

ISS actually asked shareholders to vote yes for resolution 1 to remove sabana manager which shows that it also sees big problem of sabana manager.

But what about resolution 2? If you voted yes for 1 and no for 2, basically, what it means is that the REIT will remove the existing manager and replace them with another one?

It will still create uncertainty in looking for a new external manager during the interim period.

[steadyvalue]

ISS actually asked shareholders to vote yes for resolution 1 to remove sabana manager which shows that it also sees big problem of sabana manager.

But what about resolution 2? If you voted yes for 1 and no for 2, basically, what it means is that the REIT will remove the existing manager and replace them with another one?

It will still create uncertainty in looking for a new external manager during  the interim period.

They probably think that it is better to have a new manager than the current old manager

i vote yes for both resolutions. Internalisation is a no brainer. Finally no need to pay profit to sponsor, get higher dividend, and also own part of the manager. Was a ex-Croesus shareholder. They made us pay 50million and we got a very huat takeout offer after that. 

believe Quarz might be inching there through this internalisation  

[r0n]

ISS actually asked shareholders to vote yes for resolution 1 to remove sabana manager which shows that it also sees big problem of sabana manager.

But what about resolution 2? If you voted yes for 1 and no for 2, basically, what it means is that the REIT will remove the existing manager and replace them with another one?

It will still create uncertainty in looking for a new external manager during  the interim period.

They probably think that it is better to have a new manager than the current old manager

i vote yes for both resolutions. Internalisation is a no brainer. Finally no need to pay profit to sponsor, get higher dividend, and also own part of the manager. Was a ex-Croesus shareholder. They made us pay 50million and we got a very huat takeout offer after that. 

believe Quarz might be inching there through this internalisation  

and how do you understand SIAS's statement that internalisation of a Reit manager is “neither tested nor proven in Singapore”

[steadyvalue]

Voting liao tomorrow.

saw this nice article from sgbudgetbabe on IN and decide to repost.

https://sgbudgetbabe.com/what-is-going-o...bana-reit/

[specuvestor]

Just to say that in general internalisation might not be a good idea for everything. If so then companies have no need to focus their capital / resources on core competence or higher value products and services, and outsource some functions

The issue here is actually whether the manager did a good job and if the trustee / board should review the executive arm. If they have been doing a good job, internalisation is moot. Just to help clarify the issues here.