REIT-TIREMENT - REITs Investing & Personal Finance

REITs investing & personal finance

Thursday, July 20, 2023

Sabana Industrial REIT Review @ 20 July 2023

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 increased significantly YoY mainly due to higher portfolio occupancy. However, the increase was offset by higher property expenses and resulted in a similar NPI. Nonetheless, both the amount available for distribution and DPU have improved slightly YoY.

Rental Reversion
Sabana has been consistently having positive rental reversion since 1Q 2021. In the latest quarter, it reached a new high of 27.1%

Asset Enhancement Initiative
AEI for 1 Tuas Avenue 4 is ongoing and is on track to achieve TOP by 1H 2024.

AEI for both 123 Genting Lane and 39 Ubi Road 1 has been completed in 1H 2023.

Various improvements related to sustainability are being carried out and target to complete in 2H 2023. All these improvements should see an improvement in energy efficiency after this year.

Related Parties Shareholding

  • REIT Sponsor's Shareholding: Below median by 20% or more
  • REIT Manager's Shareholding: 0%
  • Directors of REIT Manager's Shareholding: Blow median by 20% or more

Lease Profile

  • Committed Occupancy: ± 5% from median
  • WALE: Below median by 20% or more
  • Highest Lease Expiry within 5 Years: ± 10% from median. Falls in 2025
  • Weighted Average Land Lease Expiry: Below median by 20% or more

Debt Profile

  • Gearing Ratio: Below median by 20% or more
  • Cost of Debt: Above median by 10% or more
  • Fixed Rate Debt %: ± 10% from median
  • Unsecured Debt %: 100%
  • WADM: ± 10% from median
  • Highest Debt Maturity within 5 Years: Above median by 20% or more; Falls in 2027
  • Interest Coverage Ratio: ± 10% from median

Diversification Profile

  • Top Geographical Contribution: 100%
  • Top Property Contribution: Above median by 20% or more
  • Top 5 Properties' Contribution: ± 10% from median
  • Top Tenant Contribution: Below median by 20% or more
  • Top 10 Tenants' Contribution: ± 10% from median

Key Financial Metrics

  • Property Yield: ± 10% from median
  • Management Fees over Operating Distributable Income: Below median by 20% or more; $7.52 distribution for every dollar paid 
  • Operating Distributable Income on Capital: Above median by 10% or more
  • Operating Distributable Income Margin: Below median by 20% or more
  • Operating Distribution Proportion: Above median by 10% or more

DPU Breakdown
  • TTM Distributable Income Breakdown:
    • 99.8% from Operation
    • 0.2% from Release of Retention/Capital


  • Uptrend: DPU from Operation, Committed Occupancy, Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital
  • Slight Downtrend: NAV per Unit
  • Downtrend: Operating Distributable Income Margin

Relative Valuation

  • Dividend Yield - Average for 1y, 3y & 5y
  • P/NAV - Average for 1y, 3y & 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
Low Gearing Ratio0% REIT Manager's Shareholding
100% Unsecured DebtLow Directors of REIT Manager's Shareholding
Low Top Tenant ContributionShort WALE
Competitive Management FeesShort Weighted Average Land Lease Expiry
High Operating Distributable Income on CapitalHigh Cost of Debt
High Operating Distribution ProportionConcentrated Debt Maturity
DPU from Operation UptrendConcentrated Geographical Contribution
Committed Occupancy UptrendHigh Top Property Contribution
Interest Coverage Ratio UptrendLow Operating Distributable Income Margin
Property Yield UptrendOperating Distributable Income Margin Downtrend
Operating Distributable Income on Capital Uptrend

Overall, the performance remains stable for 1H 2023. Despite higher finance costs, Sabana is able to maintain a similar DPU resulting from a higher occupancy rate and positive rental reversion. The occupancy is improving and the lease expiry is moderately well spread. The impact of a potential rate hike is mitigated since there is no refinancing requirement until 4Q 2025 as well as a slightly high proportion of fixed rate.

If you have been following the news, then you would know that Quarz Capital has made a requisition for EGM to vote on two resolutions: the removal of the existing manager and to set up of a new internal manager. The EGM will be held at 10.00 a.m. on Monday, 7 August 2023 at Hope@New Tech Park, 151 Lorong Chuan, #02-06 (Lobby F) Singapore 556741. From the interim financial report, the manager has stated that the removal of the manager may result in mandatory prepayment of its outstanding loans and interest if no satisfactory agreement is reached with the lenders, within a period of not more than 30 days (or such longer period as the Lenders may agree). In this regard, the manager had written to lenders to seek a waiver but it is not granted at this moment. 

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

To support my work, join:

Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

REIT-TIREMENT Patreon - Support my work and get exclusive content

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page    

REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.

No comments:

Post a Comment