Since that statement was made in the circular, in April this year, as part of its settlement with ESR Group, Quarz has clearly stated that its cost-saving figure was incorrect and erroneous: “‘cost savings to Sabana REIT of about $7.25 million of fees’ was incorrect, and an error”.
Sabana Industrial REIT has incurred $5.55 million of internalisation costs year-to-date ended Sept 30, bringing its total expenses to $10.19 million so far. Unitholders were led to believe that internalising the REIT’s manager would cost around $5 million. The process was also expected to last some four to five months. The amount the REIT has spent on internalisation is more than twice the savings that Quarz Capital Asia claimed the REIT would make in management fees.
In a circular dated July 21, 2023 for an EGM on Aug 7, 2023, Quarz Capital Asia said: "The internalisation is projected to increase the dividend paid to unitholders by more than ~7.2% to $0.0327 per unit (~7.6% Dividend Yield) once the External Manager is removed. This increase would mainly come from cost savings of about $7.25 million of fees (of which $4.4 million are management fees, equivalent to ~14% of distributable income) and net profit which unitholders currently pay to the External Manager and its shareholder, ESR Group. The removal of the External Manager will also likely eliminate all other fees such as performance, acquisition, divestment, lease and property management fees which needs to be paid by unitholders to the External Manager."
