Sabana REIT enters new S$161 million financing deal

Singapore 50 dollar bill

Sabana Shari’ah Compliant Industrial REIT has entered a new financing agreement for new commodity murabaha facilities of up to S$161 million, the REIT said in a filing to SGX.

The funds will be used to refinance existing facilities and/or for working capital requirements, including the acquisition of Shari’ah-compliant industrial properties in Singapore or other Shari’ah-compliant properties, Sabana REIT said.

In Islamic finance, a murabaha structure typically involves a financier buying goods from a supplier and then selling them to the customer, with the payment terms including a pre-agreed profit margin and payment schedule. In a commodity murabaha, the customer immediately sells the goods back to the market; the goods are usually something traded in over-the-counter certificates in a liquid market.

Up to S$14 million will be used to finance an asset enhancement initiative (AEI) for the 151 Lorong Chuan property, with a revolving S$7 million facility up to 2022 to finance the AEI, Sabana REIT said.

HSBC’s Singapore branch is the facility agent and HSBC Amanah Malaysia is the commodity agent, while HSBC Amanah, Malayan Banking’s Singapore branch and UOB were participants, the filing said.

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