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Sabana REIT: 3Q 2012 DPU 2.34c.

Friday, October 19, 2012

Sabana REIT reported a robust set of numbers, declaring a DPU of 2.34c. The counter will go XD on 24 Oct and income distribution is payable on 28 Nov.


Total assets under management: $1.1 bn

Occupancy rate: 99.9%

Average all-in financing cost: 4.3%

Weighted average tenor of debt: 3.5 years.

Interest cover ratio: 5.5x

NAV/unit: $1.03

Sabana REIT's higher income from a slew of acquisitions comes with financing cost increasing significantly as well. Gearing is now higher at 38.3%. However, this does not disturb me much as the net result is still positive for unit holders.

In my opinion, the weakness of Sabana REIT remains a high concentration of leases expiring in 2013.  At 47.4%, it has not changed from 3 months ago. My hope is for positive rental reversions which should lead to a higher DPU. I look forward to any growth in income without any significant increase in costs to the REIT.

At the closing price of $1.13 in the last session, the annualised distribution yield is 8.28%. In an environment of very low interest rates, this is still very attractive and a further compression of yield to 7.5% does not seem improbable. That would see unit price at about $1.25.

See presentation slides: here.

Related post:
Sabana REIT: 2Q 2012 DPU 2.27c

17 comments:

JCK said...

AK

Dont how to message you.
So if you dont want this to appear pls delete.

Nice earnings, nice divs.

NeraTel- Yr Opinion

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_BC5B8187512CE5CE48257A9B0036838B/$file/Q32012Result_18Oct2012.pdf?openelement

AK71 said...

Hi JCK,

There is ample research done on NeraTel by other bloggers and its track record is impressive. I wish I had paid it attention sooner.

Anyway, I got in earlier this year at 40.5c/share. :)

kelvintan73 said...

Sabana is impressive but I believe from next year onwards, they will only distribute 90%, down from 100% of income?

Mapletree Logistics is probably one of the more disappointing one, virtually flat for yet another quarter. What do you think of her performance?

JCK said...

AK

Thats a very nice entry.

:)

pie said...

I am looking at a good price to enter, what price do you recommend? Also any other div yield+growth stock to recommend? thks

pie

AK71 said...

Hi Kelvin,

It might or might not happen. Quite a few S-REITs continue to pay out 100% of their distributable income even after the first two years of being listed. Of course, preparing ourselves mentally for a 90% payout is not wrong.

I did blog about MLT before and at the time, I was not impressed by the numbers, believing it to be too highly leveraged. It did raise funds shortly after. I believe it is in a stronger position now. I am not vested. :)

AK71 said...

Hi JCK,

Thanks. :)

The price action was rather bearish back then and I thought it could go lower. So, I initiated a smallish long position. Well, it didn't go much lower.

AK71 said...

Hi pie,

I wouldn't make any recommendations at all. ;)

What is a good price to enter? If you feel the current distribution yield is good enough for you, the current price could be a good price for you. ;)

FoodieFC said...

can they distribute a less than 90% of income nxt year?

AK71 said...

Hi FoodieFC,

They are required by law to distribute at least 90% of their distributable income. So, not to worry. :)

iisterry said...

Hi AK

Local REITs enjoy tax transparency if they distribute at laest 90% of any taxable income to unit-holders in the same year in which the income is derived by the trustee and undertakes that certain administrative procedures are complied with.

Keyword is "IF". Although I don't expect them not to do so barring unforeseen circumstances. as corporate tax bracket is 17%.

AK71 said...

Hi iisterry,

Thanks for fleshing out the discussion. Much appreciated. :)

K-Enterprises said...

Went for the REIT's investor day at MDA and met the CEO. He seems abit shaky on his comments on the future of his REIT.

AK71 said...

Hi Kelvin,

I didn't go to the event. Would you like to share what you think are his concerns?

JCK said...

Yes Kelvin

What did the CEO say?

Thanks

Casey said...

Hi AK,

Do you have any figure on the passing rent of Sabana, on their expiring lease? Unlike those bigger reits like Areit and MIT, their presentation seems releasing lesser information. Thanks.

Casey

AK71 said...

Hi Casey,

I don't have the numbers. I guess we could go through the REIT's initial portfolio of 15 properties at IPO to find out. :)

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