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Sabana REIT: 4Q 2011 results.

Friday, January 20, 2012



A DPU of 2.17c has been announced. This is a little lesser than my estimate of 2.2c. This is probably due to the fact that no rentals were collected for the property of 1 Tuas Avenue 4 in the months of November and December 2011. The manager is in advanced stage of negotiation with a party to rent the said property for a 10 year period. This, when completed, together with recent acquisitions should boost income and result in a higher DPU.

1, Tuas Avenue 4.

NAV per unit: $1.05.
Gearing: 34.1%.
Interest cover ratio: 7.4x
Average land lease expiry: 40.2 years.
(10.4% of the REIT's land leases will expire between 2032 and 2036 while 7.3% will expire between 2037 and 2041.)

Sabana REIT managed to secure lower cost of funding for its newer loans at between 3.4% to 3.9% compared to 4.8% previously. The savings will result in higher distributable income, everything else remaining equal.

The REIT will go XD on 30 Jan and income distribution is payable on 29 Feb.


Technically, I see resistance at 91c. We could see gap filling at 91.5c if resistance should be taken out. Stochastics has risen into overbought territory once more which simply suggests to me that there could be a better time to add to long positions. For anyone looking to reduce exposure to the REIT for any reason, this could be a good opportunity.

See presentation slides: here.

10 comments:

farmland investments said...

In the current market, this is the exact type of stock someone would want to hold. Steady income in a steady business and with good dividends.

AK71 said...

Hi farmland investments,

Yes, REITs would do relatively well even in an environment of zero growth.

If the current economic malaise should be protracted, there might not be many better investments to be in. :)

FoodieFC said...

Hi AK71

Can I check with you. Normally during downturn, many will turn to Reits due to high dividends.

But what about when the economy is good? Will Reits be oversold? As I believe that Reits movement is much lesser compared to blue chips

AK71 said...

Hi FoodieFC,

Fundamentally, investing in REITs is to invest for income from the underlying real estate. When the economy is good, real estate and REITs should continue to do well especially if interest rates remain low. REITs offer some semblance of stability to an investor's portfolio. :)

Your question suggests that you are also concerned with price movements. This is difficult if at all possible to predict. ;)

Bill said...

Hi ak

I heard that the distributions are not tax
Exempt. Is this true?

AK71 said...

Hi Bill,

Income distributions from S-REITs are non-taxable. :)

Where did you hear otherwise?

Bill said...

I see. Tried reading up about it. Apparently if your an invidiual investor they are tax exempt. If you are corporations or a company it might be taxable.

Thanks AK71 amazing that I still get your feedback on cny holidays :)

Ah John said...

Now S-REIT price has gone up a little, will euro crisis cause the price drop again this year? I think some euro countries is going to default their debt.

AK71 said...

Hi Bill,

Ah, I must say that I don't know about how a corporate investor might be treated differently from an individual investor. Thanks for sharing. :)

AK71 said...

Hi Ah John,

The eurozone wants to keep things together. Of course, the question is really whether it would be able to succeed. There are too many vested interests and too many complications.

I don't know if some countries like Greece would ultimately default and leave the eurozone. I do know that I have to position my portfolio so that I would benefit in any event. :)

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