Welcome to this week’s edition of top stock market highlights.
Sabana REIT (SGX: M1GU)
Sabana REIT recently held an extraordinary general meeting (EGM) on 4 August to decide on something unprecedented in Singapore REIT history.
Quarz Capital Asia (“Quarz”), an activist investor who owns 14% of the REIT as of 8 March 2023, had requisitioned for an EGM.
Two resolutions were tabled at the EGM, the first was to remove the manager of the REIT and the second was to request for the internalisation of the REIT management function.
The result was surprising as both resolutions were passed, the first with a 57.5% vote share and the second with a 55.6% vote share.
The decision to go for an internal REIT manager is a first for Singapore REITs as all REITs in Singapore have an external manager.
Only one business trust, NetLink NBN Trust (SGX: CJLU), has an internal manager.
The existing REIT manager has argued that internalising the REIT manager meant that the REIT will be left with no strong sponsor and that the removal of the manager and installation of a new manager will take at least a year or longer.
Now that both resolutions have been passed, the trustee of the REIT shall expect the current manager, Sabana Real Estate Investment Management (SREIM), to serve as interim manager until a replacement manager is appointed.
Professional advisors will be appointed by the trustee to advise on the implementation of these resolutions and to provide guidance on the ongoing management of Sabana REIT.
Quarz has asserted that an internal manager will save the REIT more than S$40 million in fees over the next decade.
These savings will translate into higher distributable income that can then be paid out as a distribution to unitholders.
A spokesperson for Quarz has asked the staff of SREIM to stay on by rewarding them with better remuneration.
Around S$3 million to S$5 million needs to be spent to set up a new manager but as the REIT’s loans are collateralised, the lenders (banks) are unlikely to trigger a change of control covenant.
Still, with this event being unprecedented in Singapore’s history, it will be interesting to see how it plays out and what happens in the months ahead.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, has launched a new business park development fund in India.
The fund, CapitaLand India Growth Fund 2, or CIGF2, has a target fund size of S$525 million and will invest in Grade A business parks in prime locations in India.
CLI will maintain a sponsor stake of 20% in CIGF2 in line with its asset-light strategy and has already secured S$263 million in funding from a global institution for a 50% stake in the fund.
This transaction is projected to add approximately S$700 million to the group’s funds under management (FUM).
For context, CLI’s FUM as of 30 June 2023 stood at S$89 billion.
CIGF2 acquired a 70% equity stake in International Tech Park Chennai from CLI for S$95 million as its seed asset, which will continue to be managed by the latter post-divestment.
The asset comprises two blocks of Grade A office space and occupies 2.6 million square feet.
These properties are being developed in two phases, with the first phase to be completed by the third quarter of this year.
CIGF2 is the property giant’s second business park development fund in India and the group also has two logistics private funds in India with a fund size of S$400 million each.
GXS Bank
GXS Bank has announced a reduction in interest rates for its savings account from 3.48% per annum (p.a.) to 2.68% p.a.
The digital bank is backed by super-app Grab Holdings (NASDAQ: GRAB) and blue-chip telco Singtel (SGX: Z74).
It was barely two weeks after the bank announced that it would increase the deposit limit on savings from S$5,000 to S$75,000.
That said, GXS’s main savings account saw its interest rate jump from just 0.08% p.a. to 2.38% p.a.
The digital bank also opened its savings accounts to all eligible individuals in Singapore.
However, the surge in demand to open new bank accounts meant that there was no more availability for new users to register for a new GXS account.
This bank account was the first product launched by the digital bank back in August last year.
It followed up with an unsecured credit product, FlexiLoan, in April this year.
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Disclosure: Royston Yang owns shares of NetLink NBN Trust.
