“If the manager is removed, Sabana REIT’s borrowing costs are expected to increase, without the backing of a strong sponsor for its unsecured facilities. Each increase of one percentage point (100 basis points) will cost unitholders an additional $3.0 million in interest each year which will reduce distribution per unit (DPU) by 0.27 Singapore cents,” warns the group. The estimate is based on Sabana REIT's outstanding 1.102 billion units.
In its latest open letter to the unitholders of Sabana REIT (SGX:M1GU
) , ESR Group says an internalisation of Sabana REIT’s manager will not result in cost savings.
Once the higher debt costs are factored in, unitholders will be worse off, says the group, which is the largest unitholder in the REIT.
