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Sabana REIT: 2Q 2013 2.4c DPU.

Wednesday, July 17, 2013

Sabana REIT has declared a DPU of 2.4c and will go XD on 23 July. Unit holders will be paid on 29 August.

The numbers are nothing out of the ordinary:

NAV/share: $1.06

Gearing: 37.1%

Interest cover ratio: 5.1x

Occupancy: 100%


Some people wonder why Sabana REIT is trading with such a high distribution yield. It is nearly 8%.

Well, there are many possible reasons but one reason is probably because 5 of its master leases are expiring in November this year and this is something I have blogged about since the second half of last year.

In the latest report, the management revealed that 1 of the master leases will be renewed while the other 4 are still undergoing negotiations. It has been revealed that in the event these 4 master leases are not renewed, the REIT will see a 7.3% vacancy rate. This would impact income available for distribution negatively even if temporarily.

As asking rents of industrial properties have risen over the last 3 years, I expect Sabana REIT to renew these leases with positive rental reversions if they should be successful in securing renewals. Failure to secure renewals would mean some temporary loss of income but it could be a good thing as the asking rents could be scaled higher compared to that of a master lease.

See presentation slides: here.

17 comments:

JCK said...

Wonder what this major item is?

Net change in fair value of financial derivatives 4,088(2013) 193 (2012)

Thought derivatives is haram?

AK71 said...

Hi JCK,

"Net change in fair value of financial derivatives relates to the change in the fair value of the profit rate swaps and the embedded derivatives component of the Convertible Sukuk based on broker quotes recognised between the last quarter and at the reporting date."

I blogged about the Sukuk before:
Convertible Sukuk.

JCK said...

AK

Thanks for that.

AK71 said...

Hi JCK,

You are welcome. :)

SnOOpy168 said...

Super banana did it again. Hurray....

Cory said...

Stop not moving leh.
"C Suku ghost" must be spook'ing a lot of people.

AK71 said...

Hi SnOOpy168,

Money flowing into your bank account next month. ;)

AK71 said...

Hi Cory,

I think the overall mood towards REITs is a cautious one. It is only natural. :)

SnOOpy168 said...

yeah... but July has traditionally be no-dividends paid month....

Cautious, yeah. On radar, yeah. Lets see.

Tan said...

Hi AK,

(Sorry that using this thread asking Marco Polo)

Will the increasing oil price going to impact MarcoPolo Marine underlying profit?



AK71 said...

Hi Tan,

It probably does not have any direct impact but a brighter outlook for the O&G sector is good for Marco Polo Marine as it is in a supportive role. :)

vansontan said...

I'm holding on to Sabana for long term, mainly for its dividends. Hopefully it'll secure the rest of the 4 contracts soon, giving us a peace of mind.

AK71 said...

Hi Vanson,

Well, long term is a long time. I rather say that I am going to be vested as long as its prospects are still good.

Of course, it is easy to say this but to actually put it in practice is something else. ;p

David & Thi said...

Hi AK,

Adding more to your Sabana holding? The CEO just sold a sizable amount of shares which doesn't look good...

Does it mean that the renewal of new Master Contract is not as smooth as expected?

I have sold all my holding much earlier and now waiting for right pricing to buy back.

Cheers
Yee

AK71 said...

Hi Yee,

Did he? I thought it happened quite a while ago. Anyway, generally, insider selling isn't a good reason not to own a stock. :)

I am quite comfortable with what I already have and I won't be adding unless valuation is compelling.

AK71 said...

The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) said it plans to buy a property located at 508 Chai Chee Lane, Singapore 469032 from Advanced Micro Devices (Singapore) Pte Ltd for $68.2 million.

The property is a seven‐storey light industrial building with two basement storeys, located at Chai Chee Lane, off Bedok North Road and Bedok North Avenue 1. Completed on 2 December 2002 with a built‐up gross floor area of about 327,574.70 square feet, the property is a JTC leasehold estate of 30 + 29 years tenure commencing from 16 April 2001. Land area of the site is around 113,689.50 square feet, with a remaining tenure of 46.5 years.

The price comprises $59.5 million for the property as well as $7.7 million upfront land premium payable to JTC for the balance of the first term (about 17.5 years) on JTC's approval and other costs.

If the acquisition follows through, both parties will enter into a lease agreement in which Advanced Micro Devices will lease back at least 50% of the total rentable area of the property.

The Edge
Friday, 23 August 2013

AK71 said...

22 August 2013 ‐

Sabana Real Estate Investment Management Pte. Ltd., as the manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust, is pleased to announce that Standard & Poor’s Rating Services (“S&P”) has on 21 August 2013, affirmed Sabana REIT’s ‘BBB‐‘ long‐term corporate credit rating and maintained its stable outlook on the Trust.

S&P notes that the rating reflects its expectation that Sabana REIT’s steady rental growth and high occupancy rates will support its business risk profile.

S&P expects the Trust to successfully manage its upcoming lease expiry in 2013 and 2015. The outlook also reflects its view that any future asset acquisitions will not raise Sabana REIT’s ratio of debt to assets above 40%.

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