Proxy advisor Glass Lewis' report on Sabana Industrial REIT makes for interesting reading. In summary, Glass Lewis is recommending that fund managers and institutional unitholders vote for all the resolutions put forward during the AGM to be held on April 25.
First off, Glass Lewis says to vote for the financial statement and auditor’s fees. Secondly, Glass Lewis also recommends unitholders vote for the resolution to appoint Mrs Elaine Lee as an independent director.
“Glass Lewis believes that five directors are almost always a minimum for an effective and properly functioning board in order to ensure that proper oversight role and to ensure that there is a sufficient diversity of views and breadth of experience in every decision the board makes. As such we expect companies that have fewer board directors to disclose a cogent explanation of how they reliably span the requisite skill sets and experience. Taking into consideration the explanation from the Trust, we will not recommend against the re-election of a director on this basis if the removal of that director would reduce the number of directors below the current board size,” Glass Lewis says.
The report also advises unitholders to vote for the general mandate and distribution reinvestment plan (DRP).
“We believe it is in the best interests of unitholders to authorise the board to issue additional units. The additional units would provide the Trust with the flexibility to finance operations and future business opportunities,” Glass Lewis says.
The resolution proposes for a maximum number of units of 20% of the issued units to be issued, and a maximum of 10% for a placement. “We find the terms of the proposal to be reasonable and within the bounds of Singapore's corporate law. We recommend that unitholders vote FOR this proposal,” the report says.
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“A distribution reinvestment plan offers a less expensive way for unitholders to acquire additional units. They avoid paying brokers’ commissions or the taxes on normal unit transactions,” Glass Lewis says. At any rate, the DRP is optional – unitholders who do not wish to take it up can opt for cash DPU.
The Glass Lewis report also outlines the history of Sabana REIT from the time of its failed merger with ESR-REIT to the acquisition of 10% of Sabana REIT by Volare and that made for interesting reading.
