Sabana REIT reports 2Q19 net property income fell 4 percent

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Sabana Shari’ah Compliant Industrial REIT reported Thursday its second quarter net property income dropped 4.2 percent on-year to S$12.04 million amid a “challenging market” and the divestment of the 9 Tai Seng Drive property earlier this year.

The REIT added that it had a year-earlier one-time recovery of costs for the 6 Woodlands Loop property.

Gross revenue for the quarter ended 30 June fell 9.3 percent on-year to S$18.21 million, the REIT said in a filing to SGX after the market close.

The distribution per unit (DPU) was 0.62 Singapore cent, down 24.4 percent from 0.82 Singapore cent in the year-ago period, the REIT said.

Overall occupancy improved to 83.2 percent by end-June from 82.4 percent at end-March, the filing said.

“Our headline performance in the quarter was impacted by ongoing industry headwinds and deliberate actions to refine our portfolio for future growth,” Donald Han, CEO of the REIT, said in the statement.

“With Singapore’s GDP [growth] at its lowest since the Global Financial Crisis and key indicators pointing to a challenging outlook, we will
maintain a ‘market-competitive stance’ to retain existing tenants and bring onboard new ones,” he added. “We are encouraged by the progress on our strategic goals, including the much-anticipated asset enhancement initiative at New Tech Park.”

In its outlook, the REIT said that overall rent reversion was expected to stay negative this year amid oversupply and island-wide vacancy in the industrial segment.

The REIT cited data from Knight Frank forecasting industrial rents would fall up to 2 percent on-year by end-2019 amid an uncertain trade outlook amid the U.S.-China trade war.

For the first half, the REIT reported net property income fell 9.1 percent on-year to S$24.69 million on gross revenue of S$36.73 million, down 10.6 percent on-year. The DPU was 1.37 Singapore cents for the first half, down 19.4 percent from 1.70 Singapore cents in the year-ago period, the filing said.

Sabana REIT’s portfolio has 18 industrial properties in Singapore as of end-June.

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