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Galaxy, Sakura Sogo Reit Sponsor, To Contest Star Asia’s Unitholder Meeting Results (Exclusive)

Galaxy, Sakura Sogo Reit Sponsor, To Contest Star Asia’s Unitholder Meeting Results (Exclusive)

SINGAPORE, Sept 13, 2019 – Galaxy JREIT Pty Limited, the sponsor of Sakura Sogo REIT, said it plans to contest the results of two Sakura Sogo REIT Investment Corporation’s unitholder meetings convened on August 30, 2019.

A significant number of votes received from Sakura unitholders were not included in the voting results at either meeting due to how both unitholder meetings were conducted, Galaxy JREIT said in a statement e-mailed to REIT AsiaPac.

On May 10, Star Asia launched a takeover proposal for Sakura Sogo. The group, which has about a 5.1% stake in Sakura Sogo REIT through its affiliate Lion Partners, requested a unitholders’ meeting. It wanted to remove Sakura’s existing executive director and for its asset manager to be replaced by Star Asia’s asset manager. In Japan, shareholders with a minimum 3% stake for at least six months are allowed to call for an extraordinary meeting and propose management changes. Star Asia’s meeting for Sakura Sogo’s unitholders was held on August 30 at 10 a.m. (Japan time).

Also read: TIMELINE: Tracking the developments of Star Asia’s controversial bid for Sakura Sogo

Sakura Sogo, which manages about 56 billion yen (US$518 million) worth of assets, had rejected Star Asia Group’s offer. It announced that it is in friendly merger talks with MIRAI Corporation, whose sponsors are Mitsui & Co. and IDERA Capital Management. 

The diversified REIT scheduled a separate meeting for unitholders to vote for the friendly merger at 4 pm on August 30, 2019.

“Approximately 30,000 proxy votes received from Sakura’s retail investors opposing proposals put to the meeting convened by Lion Partners, which is an affiliate of Star Asia, were not included,” said Neil Werrett, Managing Director of Galaxy JREIT. “Had these votes been included, Lion Partners’ proposals would not have passed. Therefore, the appointment of Toru Sugihara, as Executive Director, and of Star Asia Investment Management, as asset manager, would not have occurred.” 

On August 30, resolutions were passed for the replacement of Sakura Sogo Executive Director Makoto Muranaka with Lion’s Representative Director Toru Sugihara. Muranaka resigned ahead of the meeting. A separate proposal to replace asset manager Sakura Real Estate Investment Advisors with Star Asia Investment Advisors was also approved in the morning meeting. In the afternoon meeting, an insufficient turnout of unitholders led to failures to pass the resolutions for the proposed absorption-type merger with MIRAI, according to a Japanese language statement from Sakura Sogo.

“Lion Partners did not include Galaxy’s proposals on their Convocation Notice, which denied Sakura investors any opportunity to vote in favour of those proposals that conflicted with Lions Partners’ proposals,” Werrett added. 

“Furthermore, in the second meeting convened by Sakura, unitholders did not have any opportunity to vote on an agreed merger proposal with MIRAI Corporation because the newly and wrongfully appointed Chairman, Toru Sugihara, closed the meeting for lack of a quorum. Even though it was confirmed a quorum was present, and a vote should have been undertaken,” Werrett said.

As a result, Galaxy is seeking to cancel the results of the meeting convened by Lion Partners as well as a preliminary injunction precluding Toru Sugihara from acting as Executive Director of Sakura in light of the circumstances surrounding his election, he said. 

Also Read: Star Asia In Unprecedented Takeover Of Sakura Sogo