Sabana Industrial REIT’s AGM was a lively affair but not as lively as Great Eastern Holdings’ AGM. Questions from unitholders centred around some operational metrics such as vacancies, occupancies, 1 Tuas Avenue 4, and 9 Tai Seng Drive.
The problem with 1 Tuas Avenue 4 is that the cost of the AEI is too high, grumbled a dissatisfied unitholder. The same unitholder highlighted that the manager divested 9 Tai Seng Drive and it is now valued at more than $200 million, or $280 million depending who was describing the property.
Donald Han, CEO of Sabana REIT’s manager explained that the REIT had to divest the property because of the maturity of a $100 million sukuk at a time when the REIT’s aggregate leverage was 38%, and the regulatory ceiling was 45%.
One unitholder spent several minutes on the definition of independent and non-independent director. Eventually, Mrs Elaine Lim, who had been appointed an independent director in 2022, had to explain to this unitholder the difference between a non-independent director, and a non-independent director nominated by a major unitholder. (There are differences!)
"There is a lot of confusion between a nominee director and a non-independent director," Lim said. Non-independent directors can include lawyers and auditors who have had professional dealings with the company.
“Should resolution 3 not be passed, I will be staying on as a non-independent director. But that does not make me a nominee of ESR Group,” she explained somewhat patiently. "Our lawyer from Allen & Gledhill will explain the difference between a non-independent director and a nominee director," Lim added.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
It appeared that the unitholder who was confused about directorships may have not been clear about the fiduciary duties of directors and boards especially pertaining to M&As and offers to unitholders. The board of Sabana REIT's manager had, in 2020, recommended that unitholders vote for a merger with ESR-REIT. This continued to rankle with unitholders some three years later despite the merger not materialising.
Whatever the case, the lawyer from A&G patiently explained all that has to be explained about boards, directors, their fiduciary duties and so on.
At that point, a unitholder, unasked, blurted out, who does Mrs Lim represent? Why do you want to be on the board? The unitholder asked Lim.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
Later during the AGM, a unitholder suggested that Quarz Capital should have a representative on the board. Quarz Capital had put forward Charlie Chan’s name in 2021 as a director, but did not vote for him in an ordinary resolution in Sabana REIT’s 2022 AGM.
At any rate, Lim was not endorsed by unitholders as an independent director of the board of Sabana REIT's manager, with around 89.4% voting against the resolution. Sabana REIT also lost its general mandate, with 57.86% voting against it.
On the other hand, resolution 5, which authorises the manager to allot and issue units for the distribution reinvestment programme was passed with 95% of the votes.
