IT IS not clear how much time or money would be needed to replace Sabana Reit’s manager or internalise its management function, should unitholders vote to do so at an upcoming extraordinary general meeting (EGM), the trustee of the real estate investment trust (Reit) said in a draft statement.

The draft statement was contained in a letter sent to Sabana Real Estate Investment Management (SREIM), the Reit manager of Sabana Industrial Real Estate Investment Trust (Sabana Reit), SREIM said on Saturday (Jul 15).

In the letter, HSBC Institutional Trust Services (HSBC Trustee), trustee of Sabana Reit, said it “does not provide any advice or recommendation” to unitholders whether in support of or against the resolutions they are due to vote on at the EGM slated for Aug 4.

Unitholders will vote on two resolutions – first, the removal of SREIM, and second, the internalisation of the Reit management function of Sabana Reit.

If either or both resolutions are passed, the trustee will be directed to implement them without a replacement manager having been identified or an internalised management structure in place to transition the management of Sabana Reit to, HSBC Trustee said.

In the event that resolution 1 is passed and resolution 2 not, HSBC Trustee said: “There is no estimate available of the time it would take to identify a replacement external manager and there can be no assurance that such replacement manager will agree to the same fee structure as SREIM.”

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And if resolution 2 is passed instead, “an internalised management structure that does not currently exist will need to be identified, establised and then approved by unitholders”.

HSBC Trustee warned unitholders that “a considerable amount of time” and cost will be required. It added that it is not currently possible to estimate the length of time needed but added that “it is expected to be at least 12 months and potentially significantly longer”.

It would also need to appoint professional advisers – which may include investment, legal, financial, tax, property and other advisers – in the process, HSBC Trustee added. This would be reimbursed out of the assets of Sabana Reit in accordance with the terms of the trust deed.

It also currently expects to hold two or more EGMs to seek unitholders’ directions on these matters.

In the event these resolutions are passed and cannot be implemented in “a reasonable timeframe”, HSBC Trustee said it will “assess all options in the best interests of unitholders”, including an “orderly winding-up of Sabana Reit” or applying for court orders to take such actions.

“It is important that unitholders carefully consider the resolutions and note that there is uncertainty and risks associated with either or both the resolutions,” HSBC Trustee said.

It added that it remains neutral and independent of SREIM, any particular group of unitholders and the lenders of Sabana Reit.

Last week, ESR Group, the sponsor of Sabana Reit, filed for a court order to prevent activist investor Quarz Capital from convening the EGM. The application for the interim injunction was dismissed by the Singapore High Court a few days later.

Meanwhile, the registrar of the Singapore Supreme Court has fixed the hearing for the originating application on Jul 19, at 10 am.

Sabana Reit’s units closed flat at S$0.425 last Friday.