SINGAPORE (Jan 24): The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) has declared distribution per unit (DPU) of 0.71 cents for the 4Q18 ended December, some 14.5% lower than DPU of 0.83 cents a year ago.
This was mainly due to lower net property income in 4Q18 and higher rent-free periods given to new tenants of multi-tenanted properties.
This brings full year DPU for FY18 to 3.18 cents, a decline of 3.9% from DPU of 3.31 cents a year ago.
4Q18 distributable income fell 15.3% to $7.4 million, from $8.8 million a year ago.
Gross revenue fell 1.8% to $20.0 million in 4Q18, from $20.4 million a year ago.
The decline was mainly due to lower contributions from certain multi-tenanted properties due to lower occupancies, lower contribution from 21 Joo Koon Crescent whose master lease expired in 3Q18, and negative rental reversions for certain master leases renewed in 4Q18.
Property expenses increased by 5.1% mainly due to the absence of a non-recurring net reversal of impairment losses upon recovery of trade receivables relating to the ex-master tenant of 1 Tuas Avenue 4, and higher utilities expense incurred for multi-tenanted properties.
Consequently, net property income (NPI) fell 5.2% to $13.0 million in 4Q18, from $13.7 million a year ago.
Manager’s fees increased by 2.5% mainly due to the higher total assets in 4Q18 compared to a year ago, arising from higher fair value of the investment properties as at Dec 31, 2018.
As at end December, cash and cash equivalents stood at $7.2 million.
Looking ahead, the manager says it continues to focus on its growth plan through active asset management and progressing on the proposed asset enhancement initiative, amid challenging market conditions.
The manager says it has embarked on Phase 2 of its refreshed strategy to undertake AEIs after receiving provisional approval for the rejuvenation of New Tech Park.
Subject to approval of its final application, Sabana REIT says it has obtained a Grant of Outline Permission from the Urban Redevelopment Authority for its proposed additions and alterations work to New Tech Park at 151 Lorong Chuan.
Once approval is confirmed, the manager will be able to add close to 3,980 sqm of new temporary commercial gross floor area at the property.
“We are excited to embark on the next phase of our refreshed strategy which will be focused on growth,” says Donald Han, chief executive officer of the manager of Sabana REIT. “We are currently evaluating the best funding options for New Tech Park’s AEI, which represents approximately one third of our portfolio asset value, and its enhancement will be a significant growth driver.”
“We have also strengthened our balance sheet, giving us more headroom to fund growth and repay loans. This is primarily from our disposal of three properties for $124.58 million, realising approximately 59% gain over book value. In the near term, the sale completion of 9 Tai Seng Drive puts us in a good position to fund capital expenditures, repay outstanding loans and consider distribution to unitholders,” he adds.
Units of Sabana REIT closed half a cent lower, or down 1.2%, at 41 cents on Thursday.
