Quarz Refutes Biased & False Allegations and Reiterates Long-Term and Full Alignment of Interest with Sabana Independent Unitholders
ALL RECIPIENTS ARE ADVISED TO READ"IMPORTANT DISCLOSURE INFORMATION"AT THE END OF THE ATTACHED LETTER
SINGAPORE,April 13,2022 -- On April 13,2022,Quarz Capital published a letter to its investors concerning an article "Amidst Quarz's demands,a buyer emerges for its stake in Sabana REIT". The following is the letter:
We refer to the article "Amidst Quarz's demands,a buyer emerges for its stake in Sabana REIT". We wish to point out severe inaccuracies and misleading statements in the abovementioned article that,in our view,have the risk of misleading the public and defaming Quarz Capital.
We therefore demand an immediate correction of the statements below or a full retraction of the article both in print and the online version on The Edge's website.
1) The headline "Amidst Quarz's demands,a buyer emerges for its stake in Sabana REIT" suggests that Quarz Capital has been approached by a potential buyer or is in talks to sell its stake in Sabana Industrial REIT ("Sabana REIT","Sabana","SSREIT SP Equity","SGX:M1GU" or "Trust"). Neither of this is true. We currently have no intention to sell our stake,nor have we been approached by a potential buyer. The article also does not identify any such potential buyer. This headline is highly misleading and is not backed by the content of the article.
2) The first paragraph of the article says that Quarz Capital is "a hedge fund focused on short-term gains". This is again misleading. The author makes no attempt in the article to explain what "short-term" means. Contrary to what she suggests,our corporate presentation shows that we seek "potential upside opportunities of +30% returns over 24 months". In our view,it is wrong and damaging to our reputation to suggest that we are focusing on "short-term gains". We started engaging with Sabana and the REIT manager as early as in 2019 and it has been more than 2 years since. These efforts can hardly be described as "short-term".
3) The first paragraph of the article also suggests that we would "surely have interested buyers" if we offered our stake to buyers "at a discount". This claim is completely speculative. Firstly,we never said that we would be interested in divesting our stake,much less sell it at a discount. On the contrary,over the past two years we have constantly reminded the manager of Sabana REIT to take measures to increase Sabana's Net Asset Value ("NAV"). Since campaigning for the increase in NAV has been front and center of our strategy in order to increase shareholder value,it is misleading and damaging to our reputation to now insinuate we would be willing to sell our stake at a discount. We have repeatedly said in public that we would only consider a full takeover offer if the offer is at or above NAV and made available to all Sabana units,including independent unitholders.
4) The article also says: "On June 28,Quarz requisitioned an EGM to put Chan's appointment as an independent director to independent unitholders' vote in order to remove him,and to appoint Jan Moermann,the CIO of Quarz Capital as director. Moermann,as CIO of Quarz,would not be independent."
We strongly object to the insinuation in the above passage that we had intended to replace an independent director by a non-independent director. These statements paint an incomplete and false picture of what had actually happened.
The truth of the matter is that we had doubts about the independence of Chan Wai Kheong ("Chan") for reasons further explained below.As such,we suggested putting his appointment as independent director to a vote of unitholders and,in addition,have the unitholders also vote on 2 board appointments: an independent and a non-independent director. To this end,we proposed the nomination of Mr. Moerman as a non-independent director and the nomination of Peter Kennan as an independent director.
In the past,we have repeatedly communicated to Chan that we would not be able to vote in favor of his appointment as an independent director due to his prior business dealings with ESR Cayman ("1821 HK Equity") as well as his significant unitholding in AIMS APAC REIT,which is a key Sabana competitor.
Chan received a sizeable premium of S$20million over market price from ESR Cayman when he sold his stake in then Cambridge Industrial Trust which is now ESR REIT ("EREIT SP Equity","SGX:J91U").
As a director of Sabana REIT,Chan will be privy to confidential information regarding Sabana REIT which would conflict with his personal economic interest and the interest of AIMS APAC REIT at the expense of Sabana REIT unitholders.
We have also repeatedly communicated to the CEO and the board of directors of Sabana REIT even before Chan was appointed that,due to the above,we do not consider that Chan is suitable for his appointment as independent director.
Thus,as a compromise,we proposed to have directors for 2 board seats as the board has seemingly decided on appointing Chan. This is to ensure that independent unitholders are sufficiently represented on the board and that these representatives will act to protect independent unitholders' interests.
We would also like to mention that Mr. Chan called Quarz more than 30 times to sway and persuade us on appointing him as a director and other topics.
Finally,we would like to point out that although we are one of the main subjects of the article,we were never approached by Goola Warden nor were we given the opportunity by The Edge to comment on the statements made about us prior to the publication of the article. We are seriously troubled by this and question the journalistic professionalism and ethics of the author and The Edge.
We are also shocked that the statements that we have outlined above,in which we are specifically named,have not been verified with us before they were published even though these statements could have the risk of influencing market behaviour. We seriously question the motives of The Edge and the author,Goola Warden for publishing the article in its present form.
We therefore reiterate our demand for The Edge to immediately correct the matters in the article as stated above or to fully retract both the print and online versions of the article with immediate effect. Given the severity of the false and misleading information with the risk of misleading the public and defaming our reputation,we reserve our rights to commence legal action.
Jan Frederic Moermann
Chief Investment Officer
Havard Chi
Head of Research
Please visit and register at our website at WWW.SAVESABANAREIT.COM for more information.
IMPORTANT DISCLOSURE INFORMATION
SPECIAL NOTE REGARDING THIS LETTER
THIS LETTER CONTAINS OUR CURRENT VIEWS ON THE VALUE OFSABANAINDUSTRIAL REIT'S SECURITIES AND ACTION THATSABANAREIT'S BOARD MAY TAKE TO ENHANCE THE VALUE OF SABANAREIT'S SECURITIES. OUR VIEWS ARE BASED ON OUR ANALYSIS OF PUBLICLY AVAILABLE INFORMATION AND ASSUMPTIONS WE BELIEVE TO BE REASONABLE. THERE CAN BE NO ASSURANCE THAT THE INFORMATION WE CONSIDERED IS ACCURATE OR COMPLETE,NOR CAN THERE BE ANY ASSURANCE THAT OUR ASSUMPTIONS ARE CORRECT.SABANAREIT'sACTUAL PERFORMANCE AND RESULTS MAY DIFFER MATERIALLY FROM OUR ASSUMPTIONS AND ANALYSIS. WE HAVE NOT SOUGHT,NOR HAVE WE RECEIVED,PERMISSION FROM ANY THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS LETTER. ANY SUCH INFORMATION SHOULD NOT BE VIEWED AS INDICATING THE SUPPORT OF SUCH THIRD PARTY FOR THE VIEWS EXPRESSED HEREIN. WE DO NOT RECOMMEND OR ADVISE,NOR DO WE INTEND TO RECOMMEND OR ADVISE,ANY PERSON TO PURCHASE OR SELL SECURITIES AND NO ONE SHOULD RELY ON THIS LETTER OR ANY ASPECT OF THIS LETTER TO PURCHASE OR SELL SECURITIES OR CONSIDER PURCHASING OR SELLING SECURITIES. NOTHING HEREIN SHALL CONSTITUTE OR BE REGARDED AS INVESTMENT ADVICE. ALTHOUGH WE STATE IN THIS LETTER WHAT WE BELIEVE SHOULD BE THE VALUE OFSABANAREIT'S SECURITIES,THIS LETTER DOES NOT PURPORT TO BE,NOR SHOULD IT BE READ,AS AN EXPRESSION OF ANY PROJECTION,FORECAST OR PREDICTION AS TO THE PRICE AT WHICHSABANAREIT'SSECURITIES MAY TRADE OR MAY BE LIKELY TO TRADE AT ANY TIME. AS NOTED,THIS LETTER EXPRESSES OUR CURRENT VIEWS ONSABANAREIT. IT ALSO DISCLOSES OUR CURRENT HOLDINGS OFSABANAREITSECURITIES. OUR VIEWS AND OUR HOLDINGS COULD CHANGE AT ANY TIME. WE MAY SELL ANY OR ALL OF OUR HOLDINGS OR INCREASE OUR HOLDINGS BYPURCHASING ADDITIONAL SECURITIES. WE MAY TAKE ANY OF THESE OR OTHER ACTIONS REGARDINGSABANAREITWITHOUT UPDATING THIS LETTER OR PROVIDING ANY NOTICE WHATSOEVER OF ANY SUCH CHANGES. INVESTORS SHOULD MAKE THEIR OWN DECISIONS REGARDINGSABANAREITAND ITS PROSPECTS WITHOUT RELYING ON,OR EVEN CONSIDERING,ANY OF THE INFORMATION CONTAINED IN THIS LETTER.
As of the publication date of this letter,Quarz Capital Management Ltd. and its affiliates (collectively "Quarz"),others that contributed research to this letter and others that we have shared our research with (collectively,the "Authors") have long positions in and own options on the securities of SABANAREIT and stand to realize gains in the event that the price of such securities increases. Following publication of this letter,the Authors may transact in the securities of SABANAREIT. All content in this letter represent the assumptions and opinions of the Authors as of the publication date of this letter. The Authors have obtained all information herein from sources they believe to be accurate and reliable. However,such information is presented "as is",without warranty of any kind – whether express or implied. The Authors make no representation,express or implied,as to the accuracy,timeliness,reliability,fairness or completeness of any such information,opinions or conclusions expressed herein or with regard to the results obtained from its useand no liability whatsoever is accepted for any loss arising directly or indirectly as a result of any person acting upon any information,opinion or conclusion contained in this letter. All expressions of opinion are subject to change without notice,and the Authors do not undertake to update or supplement this letter,or any information,opinions or conclusions contained herein.
This letter is for informational purposes only and it is not intended as an official confirmation of any transaction. All market prices,data and other information are not warranted as to completeness or accuracy and are subject to change without notice. The information included in this letter is based upon selected public market data and reflects prevailing conditions and the Authors' views as of this date,all of which are accordingly subject to change. The Authors' assumptions,opinions and estimates constitute a best efforts judgment and should be regarded as indicative,preliminary and for illustrative purposes only.
Any investment involves substantial risks,including,but not limited to,pricing volatility,inadequate liquidity,and the potential complete loss of principal. The estimated fundamental value of the securities covered herein as expressed in this letter only represents a best efforts estimate of the potential fundamental valuation of a specific security,and is not expressed as,or implied as,assessments of the quality of a security,a summary of past performance,or an actionable investment strategy for an investor.
This letter does not in any way constitute an offer or solicitation of an offer to buy or sell any investment,security,or commodity discussed herein or of any of the affiliates of the Authors. Also,this letter does not in any way constitute an offer or solicitation of an offer to buy or sell any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction. To the best of the Authors' abilities and beliefs,all information contained herein is accurate and reliable. The Authors reserve the rights for their affiliates,officers,and employees to hold cash or derivative positions in any company,entity or securities discussed in this letter at any time. As of the original publication date of this letter,investors should assume that theAuthors are holding long position inSABANAREITand have positions in financial derivatives that reference this security and stand to potentially realize gains in the event that the market valuation of SABANAREIT'ssecurities is higher than prior to the original publication date. These affiliates,and individuals shall have no obligation to inform any investor about their historical,current,and future trading activities. In addition,the Authors may benefit from any change in the valuation of any other companies,securities,or commodities (if any) discussed in this document. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of the Authors' operations and their affiliates. The compensation structure for the Authors' analysts is generally a derivative of their effectiveness in generating and communicating new investment ideas and the performance of recommended strategies for the Authors. This could represent a potential conflict of interest in the statements and opinions in the Authors' documents.
The information contained in this letter may include,or incorporate by reference,forward- looking statements,which would include any statements that are not statements of historical fact. Any or all of the Authors' forward-looking assumptions,expectations,projections,intentions or beliefs about future events may turn out to be wrong. These forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks,uncertainties and other factors,most of which are beyond the Authors' control. Investors should conduct independent due diligence,with assistance from professional financial,legal and tax experts,on all securities,companies,and commodities discussed in this letter and develop a stand-alone judgment of the relevant markets prior to making any investment decision.
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS LETTER ARE FORWARD-LOOKING STATEMENTS INCLUDING,BUT NOT LIMITED TO,STATEMENTS THAT ARE PREDICTIONS OF OR INDICATE FUTURE EVENTS,TRENDS,PLANS OR OBJECTIVES. RELIANCE SHOULD NOT BE PLACED ON SUCH STATEMENTS BECAUSE,BY THEIR NATURE,THEY ARE SUBJECT TO KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE OR ACTIVITIES AND ARE SUBJECT TO MANY RISKS AND UNCERTAINTIES. DUE TO SUCH RISKS AND UNCERTAINTIES,ACTUAL EVENTS OR RESULTS OR ACTUAL PERFORMANCE MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF THE FUTURE TENSE OR OTHER FORWARD-LOOKING WORDS SUCH AS "VIEW," "BELIEVE," "CONVINCED," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "SHOULD," "MAY," "WILL," "OBJECTIVE," "PROJECT," "FORECAST," "BELIEVES," "CONTINUE," "STRATEGY," "PROMISING," "POTENTIAL," "POSITION" OR THE NEGATIVE OF THOSE TERMS OR OTHER VARIATIONS OF THEM OR BY COMPARABLE TERMINOLOGY.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTATIONS SET FORTH IN THIS LETTER INCLUDE,AMONG OTHER THINGS,THE FACTORS IDENTIFIED IN THE RISK SECTIONS INSABANAREIT'SANNUAL REPORT FOR THE YEAR ENDEDDECEMBER31ST,2021AND PROSPECTUS. SUCH FORWARD-LOOKING STATEMENTS SHOULD THEREFORE BE CONSIDERED IN LIGHT OF SUCH FACTORS,AND QUARZ CAPITAL MANAGEMENT IS UNDER NO OBLIGATION,AND EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION,TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS,WHETHER AS A RESULT OF NEW INFORMATION,FUTURE EVENTS OR OTHERWISE,EXCEPT AS REQUIRED BY LAW.
