Quarz Capital Management and Black Crane Capital have landed a resounding win on Friday, blocking a contentious tie-up between Sabana Shari’ah Compliant Industrial REIT and ESR REIT.

Sabana said in a Friday statement that its shareholders rejected a proposal to amend its trust deed, which led to the termination of the company’s proposed merger with larger rival ESR REIT.

The proposal was backed by two-thirds of the votes cast, below the required 75% for the merger to proceed, a separate filing revealed.

Quarz and Black Crane have long criticized the deal, alleging it was “value destructive” to Sabana shareholders, and raised governance concerns regarding the influence of Asian logistics giant ESR Cayman, which owns the managers of both REITs.

“This is the first time in the 18-year history of Singapore Exchange’s REIT market that a proposed merger has been voted down,” Quarz Capital and Black Crane, who control 11% of Sabana’s shares, said in a statement to Activist Insight Online.

”The outcome underscores the total lack of confidence that independent unitholders have in the current board and management of Sabana REIT Manager,” said Quarz Chief Investment Officer Jan Moermann, adding that the result should act as a warning to all companies that they should not ignore independent shareholders.

Quarz last year tried to push Sabana to merge with ESR REIT via a cash-plus-stock deal that valued Sabana at SG$0.545 per share. The activist said the deal would resolve some of the corporate governance issues stemming from ESR Cayman’s involvement in their managers.

Shortly after that appeal, Hong-Kong listed ESR Cayman claimed to have placed “strict internal controls” to regulate conflicts of interest at the two REITs, a measure aimed at preventing the sharing of information between the managers of the two companies.

In July, eight months after Quarz’s call for a combination, Sabana and ESR REIT announced an agreement to merge but at an exchange ratio of 0.94 times in ESR’s favor. Quarz and Black Crane swiftly reacted, bashing the deal.

The activists last month urged Sabana to internalize its investment manager and pledged to call a vote on the matter if the merger with ESR REIT fell through, a plan Quarz and Black Crane now said would be fast-tracked. Taking management in-house would reduce costs for Sabana but also help it transition to a “conflict-free” team, the activists said in a recent presentation.

Sabana cast doubt on Quarz and Black Crane’s analysis and said internalizing its management could push the company to default on its loans, despite the activists’ claim that “a number of financial institutions and investors” were interested in financing the business.

Sabana is a real estate investment trust with a portfolio of 18 properties in Singapore and total assets of about SG$900 million ($675 million). The company’s shares closed unchanged on Friday at SG$0.355 each, giving it a market value of SG$373 million ($280 million).