The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT), on Jan 22, reported distribution per unit (DPU) of 2.29 cents for the 2HFY2020 ended December, 47.7% higher than 1.55 cents a year ago.
2HFY2020 distributable income came in 48.1% y-o-y higher at $24.1 million, which includes the $6.1 million or 0.58 cents per share that was withheld from distribution in 1HFY2020. The higher distributable income for the half-year period also includes operation income of $14.8 million and rollover adjustments from previous years of $3.2 million.
Excluding the 0.58 cents DPU from 1HFY2020, DPU for 2HFY2020 would have been 1.71 cents, up 10.3% y-o-y.
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Excluding the distributable income brought over from 1HFY2020, 2HFY2020 distributable income would have been 10.7% higher y-o-y. This was mainly due to lower finance costs in 2HFY2020 compared to 2HFY2019, as well as a one-time distributable rollover adjustment from tax rulings by IRAS.
Gross revenue for 2HFY2020 fell 5.5% y-o-y to $37.4 million mainly due to lower contribution from 10 Changi South Street 2 following the termination of a master lease in 2HFY2019.
2HFY2020 net property income (NPI) fell 11.7% y-o-y to $23.8 million due to lower revenue as well as allowances made for impairment losses on trade receivables for certain tenants.
As at Dec 31, 2020, portfolio occupancy levels overall fell 3.7 percentage points q-o-q to 76.5%. The lower rate was due to the expiry of the master lease at 51 Penjuru Road, which was replaced by a tenancy of 73.1% and the expiry of the master lease at 30/32TA8.
Rental reversion for FY2020 stood at a positive 0.9%.
DPU for the FY2020 fell 5.5% y-o-y to 2.76 cents, while distributable income fell 5.3% y-o-y to $29.1 million mainly due to lower net property income and the absence of one-time capital gains in 1HFY2019.
Gross revenue for the FY2020 fell 6.1% y-o-y to $71.7 million.
NPI for FY2020 fell 13.5% y-o-y to $44.6 million due to lower contribution from 10 Changi South Street as its master lease was terminated in 2HFY2019. The lower NPI was also attributable to lower contribution from 3A Joo Koon Circle whose master lease expired in 4QFY2019, as well as higher allowances for impairment loss on trade receivables.
For the FY2020, other trust expenses increased by over three times to $3.5 million from $1.03 million in FY2019 due to the one-time fees related to the proposed merger of ESR-REIT and Sabana REIT via a trust scheme of arrangement.
FY2020 also saw a further loss in the fair value of investment properties at $61.9 million from $7.9 million in FY2019.
“We understand unitholders continue to be concerned about Sabana REIT’s growth, especially in these uncertain times but we would like to reassure unitholders that we will continue our refreshed strategy,” says Donald Han, CEO of the manager.
On Dec 4, 2020, Sabana REIT announced that it was not proceeding with the proposed merger with ESR-REIT as less than 75% of votes were cast in favour of the Sabana Trust Deed Amendments Resolution.
“We have recorded an improved set of results over 1HFY2020. The outlook remains uncertain in 2021, but we are excited about the opening of our new NTP+ mall, which has seen strong interest from tenants. At the same time, the board and manager will continue to explore and consider all viable options for the REIT,” Han adds.
The manager says it will continue to ensure the REIT’s resilience as a standalone entity.
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Following the cessation of the proposed merger, Sabana REIT says it is seeing an increased take-up in retail at its new NTP+ mall and that the mall is on track to be completed by 1Q2021.
For 23NSA5, the manager has secured a new anchor tenant – a US-based electronics company. The space has also achieved a 17.4% increase in valuation to $36.4 million as at Dec 31, 2020, compared to the $31.0 million valuation in June 30, 2020.
The manager has also clinched 43 new or renewed leases in 2HFY2020 totalling around 1 million sqft.
“While the macroeconomic landscape still remains challenging, the manager will continue all efforts to remain resilient, with positive catalysts including the launch of NTP+ by 1Q2021. It will remain focused on executing its refreshed strategy through proactive lease and asset management, as well as AEI and rejuvenation of select assets, underpinned by continued fiscal prudence,” says the manager.
Unitholders can expect to receive their distribution on Feb 26.
Units in Sabana REIT closed flat at 37.5 cents on Jan 21.
