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MAS’ Response to Queries on Proposed Merger of ESR REIT and Sabana REIT

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Singapore, 28 August 2020…In response to media queries received in relation to the proposed merger of ESR REIT and Sabana REIT, MAS would like to clarify that our regulatory framework does not prohibit a shareholder group from owning substantial stakes in two REIT managers managing REITs invested in the same property class. Under the Securities and Futures Act, there are regulatory safeguards to mitigate potential conflicts of interest:

– Boards of REIT managers must comprise at least half independent directors where unitholders do not have the right to vote on the appointment of directors to the board.   

– REIT managers and their directors have a legal obligation to act in the best interests of unitholders, and prioritise unitholders’ interests over those of the REIT manager and its shareholders.

– Independent trustees must be appointed for all REITs to safeguard the interests of unitholders.  The trustees are also regulated by MAS.

2     MAS may require financial institutions to put in place additional measures to address specific risks where needed, including that of conflicts of interests.  We have done so in the case of ESR REIT and Sabana REIT.

3     Singapore’s regulatory framework governing mergers and takeovers is well-established and ensures that shareholders/unitholders are given sufficient information, independent advice and time to consider and decide on the offer.

4     Pursuant to The Singapore Code on Take-overs and Mergers, the proposed merger of ESR REIT and Sabana REIT via a trust scheme of arrangement is subject to, amongst others, the approval of a majority in number of Sabana REIT unitholders representing three-fourths in value of unitholders present and voting. In addition, ESR REIT Manager, its concert parties as well as the common substantial ESR REIT and Sabana REIT unitholders (i.e. those holding 5% or more interests in both ESR REIT and Sabana REIT) are required to abstain from voting. Therefore, only Sabana REIT unitholders who are independent have a say in deciding whether to approve or reject the proposed merger based on the financial terms that have been negotiated and put forth by the REIT managers. An independent financial adviser (IFA) must also be appointed to advise Sabana REIT unitholders on the proposed merger, and its advice will be included in the trust scheme document. MAS encourages unitholders to carefully study the trust scheme document, including the assessment and advice of the IFA, in deciding whether to vote for or against the proposed merger.

5     Unitholders can also seek assistance from the Securities Investors Association (Singapore) to engage the managers of Sabana REIT or ESR REIT for clarifications that could help them make an informed decision.

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Regulator Information

Abbreviation: MAS
Jurisdiction: Singapore

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