HSBC INSTITUTIONAL Trust Services, or the trustee of Sabana Industrial Real Estate Investment Trust : M1GU 0% (Sabana Reit), has presented an indicative timeline for the internalisation of the trust's management function.

The extraordinary general meetings (EGMs) to implement and effect the internalisation are likely to be in Q3.

In a statement addressed to Sabana Real Estate Investment Management – the current manager of Sabana Reit – that was posted to the bourse on Tuesday (Apr 9), the trustee outlined a "workplan" over the next six months pertaining to the internalisation timeline, spanning from the appointment of professional advisers to the transition and operationalisation.

A number of the different stages of the internalisation were, however, dependent on the prior steps.

The trustee also said that the total costs incurred between Jan 1 and Mar 31 this year related to the implementation of the internalisation process amounted to about S$2.1 million. These costs, HSBC Institutional Trust Services said, comprised the trustee's expenses on a cost-recovery basis (1 per cent), as well as fees incurred for legal advisers, financial and tax analysis, and change and project management that jointly accounted for the remaining 99 per cent.

The trustee said the costs of implementing the internalisation process to date comprise the costs incurred that are related to implementing the internalisation in accordance with the resolutions passed at the EGM on Aug 7 last year, costs incurred in connection with the Order 32 Application, as well as costs incurred in considering and responding to correspondence and proposals from certain unitholders in relation to the internalisation.

HSBC Institutional Trust Services also said the internalisation committee did not notify or discuss the second requisitioned resolutions with it prior to the issuance of the notice.

"The trustee is concerned that if the second requisitioned resolutions are passed, this could create uncertainty and prejudice for Sabana Industrial Reit and its unitholders," the trustee said in the statement.

The trustee argued that most of these resolutions seek to "circumvent the need to table proposed trust deed amendments for unitholders' consideration and approval" by way of an extraordinary resolution by directing the trustee to, among other things, consult regulatory authorities for other alternatives, take steps to enable it to exercise its discretion under the trust deed to certify these proposed trust deed amendments, and incorporate these proposed trust deed amendments elsewhere apart from the deed itself.

It further argued that the removal of these amendments in question from the trust deed could result in "ambiguities" in the deed, and cause prejudice to the operation and management of Sabana Industrial Reit and its unitholders.

"Regulators are the appropriate authorities for regulatory matters within their jurisdiction but not necessarily for issues of law. Issues of law relating to the interpretation and application of the trust deed are appropriately heard and should be resolved by the court as the appropriate forum," the trustee added.

The trustee also asked unitholders to "carefully consider and evaluate the information" it had set out in an annex about its rationale for each proposed trust deed amendment and the risks it had identified that could affect the Reit and its unitholders in the event the amendment is not adopted.

"The trustee will continue to provide further updates and engage with unitholders in respect of material developments," it added.

Units of Sabana Reit ended Tuesday unchanged at S$0.36.