Investors in a Singapore real estate investment trust (REIT) voted down a merger with a larger rival on Friday, in a rare win for shareholder activism in the city-state dominated by retail investors.
Sabana REIT, which was under pressure from Quarz Capital and Black Crane Capital over a planned merger with ESR-REIT, said shareholders rejected a proposal to amend its trust deed, thus, terminating the merger.
The activists had said the deal between Sabana REIT and ESR-REIT, whose managers are both owned by a unit of Asian logistics giant ESR Cayman Ltd, had undervalued Sabana REIT.
“This is the first time in the 18-year history of Singapore Exchange’s REIT market that a proposed merger has been voted down,” Quarz Capital and Black Crane said in a statement.
Sabana REIT said 66.7% of its shareholders had backed the proposal to amend its trust deed, but this was below the 75% required for a merger vote to proceed.
“While we believe the merger has a compelling strategic rationale, unitholders have expressed that they prefer Sabana REIT to remain as a standalone REIT,” said Chief Executive Donald Han.
Quarz Capital had proposed a merger between Sabana REIT and ESR-REIT last year in a cash-plus-stock deal that would value Sabana REIT at S$0.545 a unit, while Black Crane had voiced concerns about Sabana REIT’s market valuation.
When both REITs announced an all-stock deal in July – just as the pandemic pummelled the sector – valuing Sabana REIT at S$397 million ($298 million) or 37.7 Singapore cents a unit, the activists rejected it.
“The outcome underscores the total lack of confidence that independent unitholders have in the current board and management of Sabana REIT Manager,” Jan Moermann, chief investment officer at Quarz Capital, said on Friday.