By The Edge Singapore

Published on Mon, Jun 28, 2021 

On June 28, Sabana Shariah Compliant Industrial REIT’s manager revealed that an independent director appointed by its nominating committee on June 2 this year, Charlie Chan Wai Kheong, was proposed by Quarz Capital.

Sabana REIT’s manager announced that Quarz Capital – which currently holds 9% of Sabana REIT – wants to requisition an EGM to vote to remove Chan unless endorsed by independent unitholders. Instead Quarz Capital is proposing its own CEO and chief investment officer (CIO) Jan Moermann as a non-independent non-executive director, and CEO and CIO of Black Crane, Peter Kennan, as an independent non-executive director.

In reply, Sabana REIT’s manager pointed out that Chan was proposed by the requisitionists (Quarz Capital and Black Crane) and not ESR Cayman. “The fact that the requisitionists had put up his name and in less than one month after he was appointed as director on 2 June 2021, they are now objecting to his appointment as director on the ground that he has a business dealing with ESR Cayman more than 4 years ago when this is public information is irresponsible of the requisitionists,” Sabana REIT’s manager says. In addition, Quarz Capital has come to realise that Chan holds 5% in AIMS APAC Industrial REIT, also well known in the public domain.

It is common knowledge in the market that Chan had agreed to divest his stake in Cambridge Industrial Trust to ESR Cayman in October 2016, and the transaction was completed in February 2017. This was announced very clearly by the former Cambridge Industrial Trust’s manager at the time. In fact, Chan had an option to sell his shares in Cambridge Industrial Trust at 70 cents to ESR Cayman, the highest price at the time.

At any rate, Sabana REIT’s manager has pointed out that Kennan cannot be considered independent according to the rules and regulations in the Securities and Futures (Licensing and Conduct of Business) Regulations (SFLCBR) and the Code of Corporate Governance 2018 (CG Code).

“One of the clear categories in which a person is regarded to be non-independent under the SFLCBR and the CG Code is where he is an employee of a substantial unitholder of a REIT or is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial unitholder,” Sabana REIT’s manager points out.

“By putting forward these two individuals who are each CEO and CIO of each requisitionist, one of whom is also a substantial unitholder, this will in fact dilute the overall independence of the board of directors of the Manager,” it adds.

Also, based on the SFLCBR and CG Code, the relevant period in assessing the business relationship between a director and a related corporation of the REIT Manager is the current year in which the director is proposed to be appointed as an independent director and the immediately preceding financial year of the REIT Manager. The dealings between Chan and ESR Cayman took place between October 2016 and February 2017, which is more than four years ago.

Sabana REIT’s manager says it “intends to seek unitholders’ endorsement of Mr Chan Wai Kheong as independent director at the next Annual General Meeting which is in line with the direction from the Monetary Authority of Singapore. The timing for seeking Unitholders’ endorsement is a matter to be determined by the Manager at its discretion”.