Sabana REIT 1Q19 net property income falls on lower occupancy and a divestment

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Sabana Shari’ah Compliant Industrial REIT reported Saturday its first-quarter net property income fell 13.3 percent on-year to S$12.65 million on lower occupancy and a divestment.

Revenue for the quarter ended 31 March fell 11.8 percent on-year to S$18.52 million, the REIT said in a filing to SGX over the weekend.

“Lower occupancies led to reduced rental income, including the loss of a significant tenant at 151 Lorong Chuaun and non-contribution from 9 Tai Seng Drive which was divested on 10 January 2019,” Sabana REIT said.

The distribution per unit was 0.75 Singapore cent, down 14.8 percent from 0.88 Singapore cent in the year-ago quarter, the filing said. The portion of the DPU from operations, 0.63 Singapore cent, was down 28.4 percent on-year, while the remaining 0.12 Singapore cent was from capital gains, the REIT said.

Though the REIT had “experienced some challenges” in the quarter, Donald Han, CEO of Sabana REIT, said “the work from the past year is bearing fruit, enabling us to boost the distributable amount to unitholders from divestment proceeds from nonperforming and mature properties. Our actions have also given us sufficient debt headroom and the flexibility to undertake growth initiatives.”

Han said the asset enhancement initiative (AEI) at New Tech Park would begin, after a long wait. The REIT was given permission to add 3,980 square meters of new temporary commercial space at the property, which is around a third of the trust’s overall portfolio asset value, the filing said.

“While the AEI will involve some temporary disruption to the business, it will be carried out in phases to minimize impact on tenants’ operations, and to the REIT’s performance,” the REIT said.

The REIT’s overall occupancy was at 82.4 percent at the end of March, compared with 84.4 percent at the end of December, but if the 1 Tuas Avenue 4 property had been divested, occupancy would have been at 85.5 percent, the filing said.

In its outlook, the REIT said it expected overall rent reversions this year were likely to remain negative showing continued oversupply and island-wide vacancies. Data from JTC. Corp., Singapore’s statutory board responsible for managing industrial estates, was used in the assessment.

Sabana REIT currently has a portfolio of 18 properties in Singapore in the industrial, warehouse and logistics segments.


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