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Thursday, January 20, 2022

Sabana Industrial REIT Review @ 20 January 2022

Basic Profile & Key Statistics

Sabana Industrial REIT (Sabana) invests in industrial and logistics properties which currently owns 18 properties in Singapore.

Performance Highlight

Gross revenue and NPI have increased YoY 14.4% and 10.4% respectively As for distributable income and DPU, it would be fair to compare value from operations; both distribution and DPU increase 11.3% YoY.

Rental Reversion

Rental reversion is 8.8% for 2H 2021and 10.5% for FY 2021.

Asset Enhancement Initiatives
In 2H 2021, AEIS for 8CL and 15JKB have been completed. As for New Tech Park, the replacement of passenger office lifts has been completed.

1TA4 which was previously held for divestment has been re-classified into an investment property and earmarked for major AEI. As for New Tech Park, the upgrading of the remaining 7 ground floor lobbies is expected to be completed by 3Q 2022.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 21.199%
  • REIT manager's shareholding is low at 0%
  • Directors of REIT manager's shareholding is high at 0.449%

Lease Profile

  • Occupancy is low at 85.4%
  • WALE is short at 2.7 years
  • Highest lease expiry within 5 years is slightly high at 29% which falls in 2023
  • Weighted average land lease expiry is short at 31.12 years

Debt Profile

  • Gearing ratio is slightly low at 35%
  • Cost of debt is high at 3.1%
  • Fixed rate debt % is low at 60.4%
  • Unsecured debt % is low at 61%
  • WADM is moderate at 2.9 years
  • Highest debt maturity within 5 years is high at 70.5% which falls in 2024
  • Interest coverage ratio is moderate at 4.4 times

Diversification Profile

  • All of its properties are located in Singapore
  • Top property contribution is slightly high at 21.5%
  • Top 5 properties contribution is low at 44.7%
  • Top tenant contribution is low at 11.1% 
  • Top 10 tenants contribution is high at 45.8%

Key Financial Metrics

  • Property yield is high at 5.5% 
  • Management fees over distribution is slightly high at 14.8% in which unitholders receive S$ 6.76 for every dollar paid 
  • Distribution on capital is moderate at 3.7%
  • Distribution margin is low at 38.5%

Trends

  • Uptrend - Interest Coverage Ratio
  • Flat - Distribution on Capital, Distribution Margin
  • Slight Downtrend - DPU, Property Yield
  • Downtrend - NAV per Unit

Relative Valuation

  • P/NAV - Above +1SD for 1y, 3y & 5y
  • Dividend Yield - Below -1SD for 1y; Average for 3y & 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow Sponsor's Shareholding
High Directors of REIT Manager's ShareholdingLow Manager's Shareholding
Low Top 5 Properties ContributionLow Occupancy
Low Top Tenant ContributionShort WALE
High Property YieldShort Weighted Average Land Lease Expiry
Interest Coverage Ratio UptrendHigh Cost of Debt
 Low Fixed Rate Debt %
 Low Unsecured Debt %
 Concentrated Debt Maturity
 High Top Geographical Contribution
 High Top 10 Tenants Contribution
 Low Distribution Margin
 NAV per Unit Downtrend

Sabana's performance has improved as compared to the previous 1H result after the AEI completion at New Tech Park with the new NTP+ mall. Management mentioned they would focus on phase 2 - AEI and move on with phase 3 - acquisition of their refreshed strategy from 2022 onward. So, would there be any acquisition in the near term? Let's wait and see. Below is the snapshot from Sabana's presentation on the refreshed strategy.


You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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