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Sabana REIT: Resistance to watch.

Friday, March 16, 2012

One month ago, I mentioned that Sabana REIT's unit price saw higher lows formed since August 2011 and that it was repeatedly testing gap resistance at 91c and 91.5c. I wondered then whether its unit price could break resistance to go higher. It did, going on to break resistance at 93.5c, and, in the last few sessions, tested resistance at 95c. It ended the day at 96c a unit with a massive buy up after market closed today.

Sabana REIT is my largest investment for passive income and what I have now is part of my core investment for passive income. So, it is unlikely that I would sell unless its unit price becomes very much over valued. Keeping the status quo, Sabana REIT would generate approximately 38% of my passive income from S-REITs alone this year.

I am expecting a higher DPU in the next quarter as contributions from acquisitions made in recent months as well as savings from lower cost of funding for newer loans kick in.

Technically, if the bullish momentum continues, 99.5c could be the next level to be tested in time.

At 99.5c, its distribution yield is still a very attractive 8.84%. I still feel that a fair value for the REIT's units is closer to $1.10 per unit which would see its distribution yield compressing to 8%.

Related post:
Sabana REIT: 4Q 2011 results.


FoodieFC said...

yea, up up and away. Good to see it going up. But basically all the reits have gone up!

AK71 said...

Hi FoodieFC,

This goes to show that REITs are not only great investments for income, we can have nice capital gains too. ;)

BC said...

I still remembered it hit 84ct during the august sell-down last year and I told my stock kaki to buy as it was trading at 10% yield! worth a bet lah...

Cache is another one, I reckon both of them are doing catch-up else the yield gap between them and the big brother Ascendas will be too wide.

AK71 said...

Hi BC,

I bought quite a bit myself at 80+c a unit. Could not resist it. ;)

I hope your kakis listened to you and made some money in the process. However, it is usually hard to heed buy calls when everything looked bearish unless they have trained themselves to be contrarians.

I have Cache Logistics Trust too although it forms a much smaller proportion of my portfolio compared to AIMS AMP Capital Industrial REIT and Sabana REIT. :)

Don_Jerome said...

Hi AK71

Have been reading your blog with great interest lately. Was wondering if you can explain what NPI is to me. I read it in one of the reports you linked us to but i cant find anything on the internet that explains it well.

many thanks :)

AK71 said...

Hi LW,

NPI = Net property income.

This is basically income from a piece of real estate less expenses.

When investing in property, we should look at the NPI yield to see if it makes investment sense. This is in addition to considerations such as cost of mortgage.

NPI yield would be NPI divided by the cost of buying a property.

Some people look at gross yield which is simply the gross rental income divided by the value of a property. This gives a quick but inaccurate picture. The level of inaccuracy would vary from case to case, of course.

Ray said...

hey AK, do u look at Ascendas REIT?

AK71 said...

Hi Ray,

I did but I decided to focus on investing for higher distribution yields. :)

Don_Jerome said...

Icic. Many thanks for the detailed reply. :) I do learn quite alot from reading ur blog. :)

AK71 said...

Hi LW,

You are welcome. I am glad you have found my blog helpful. :)

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