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REITs investment & personal finance


Monday, July 25, 2022

Sabana Industrial REIT Review @ 25 July 2022

Basic Profile & Key Statistics

  • Main Sector(s): Industrial, Logistics & Retail
  • Country(s) with Assets: Singapore
  • No. of Properties (exclude development/associate/fund): 18

Key Indicators


Performance Highlight
Gross revenue, NPI, distributable income and DPU improved yoy mainly due to higher contribution from New Tech Park, 23 Serangoon North Avenue 5, 8 Commonwealth Lane and 51 Penjuru Road.

Rental Reversion
Rental reversion is at 4% for 1Q and 17.4% for 2Q.

Asset Enhancement Initiatives

Ongoing upgrading is being carried out for a few properties. As for 1 Tuas Avenue 4, Sabana REIT is in active discussions with prospective tenants where the property would be converted as per tenants' requirements. The target completion is in 2H 2023.

Sensitivity to Interest Rate
For every 0.2% increase in interest rate, DPU would be reduced by 0.5% per annum.

Related Parties Shareholding

  • REIT sponsor's shareholding: Below median for more than 10%
  • REIT manager's shareholding: 0%
  • Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

  • Occupancy: Below median for more than 5%
  • WALE: Below median for more than 20%
  • Highest lease expiry within 5 years: Above median for more than 20%. Falls in 2023
  • Weighted average land lease expiry: Below median for more than 20%

Debt Profile

  • Gearing ratio: Below median for more than 10%
  • Cost of debt: Above median for more than 20%
  • Fixed rate debt %: ± 10% from median
  • Unsecured debt %: 100%
  • WADM:  Below median for more than 10%
  • Highest debt maturity within 5 years: Above median for more than 10%; Falls in 2024
  • Interest coverage ratio: ± 10% from median

Diversification Profile

  • Top geographical contribution: 100%
  • Top property contribution: Above median for more than 20%
  • Top 5 properties contribution: Below median for more than 10%
  • Top tenant contribution: Below median for more than 20%
  • Top 10 tenants contribution: ± 10% from median

Key Financial Metrics

  • Property yield: ± 10% from median
  • Management fees over distribution: ± 10% from median; $7.25 distribution for every dollar paid
  • Distribution on capita: ± 10% from median
  • Distribution margin: Below median for more than 10%

Trends


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

Relative Valuation

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

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
Low Gearing RatioLow REIT Manager's Shareholding
100% Unsecured DebtLow Directors of REIT Manager's Shareholding
Low Top 5 Properties ContributionLow Occupancy
Low Top Tenant ContributionShort WALE
Interest Coverage Ratio UptrendConcentrated Lease Expiry
Distribution on Capital UptrendShort Weighted Average Land Lease Expiry
 High Cost of Debt
 Short WADM
 Concentrated Debt Maturity
 High Top Geographical Contribution
 High Top Property Contribution
 Low Distribution Margin

The fundamental has been improving and the performance has improved as compared to the previous 1H. The rental reversion for this quarter is high at 17.4% and with improving occupancy as well. Let's hope Sabana can continue this momentum so that the performance could be improved further.


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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