SINGAPORE (Oct 23): The manager of Sabana REIT has announced a DPU of 0.79 cent for the 3Q17 ended Sept, down 2.5% from 0.81 cent a year ago.
Sabana Real Estate Investment Management (SREIM) says it is still in discussions with ESR Funds Management to explore options in connection with the strategic review as announced in August.
“At this point, Sabana REIT has not entered into any definitive legally binding agreement,” adds SREIM.
In 3Q17, gross revenue was 9.4% lower at $20.9 million from a year ago. This was mainly due to non-recognition of revenue for the master leases at 1 Tuas Avenue 4 and 6 Woodlands Loop, conversion of 39 Ubi Road 1 into multi-tenanted lease arrangements in 4Q16, and lower revenue contribution from 151 Lorong Chuan, 8 Commonwealth Lane, 508 Chai Chee Lane and 2 Toh Tuck Link.
However, revenue was positively offset by a higher revenue contribution from 9 Tai Seng Drive and 15 Jalan Kilang Barat.
Property expenses decreased 18.2% due to lower property tax, land rent, utilities and marketing expenses, and lower impairment losses on trade receivables arising from revenue from 1 Tuas Avenue 4 not recognised from 3Q17 onwards. This was partially offset by higher property expenses incurred from the lease conversion of 39 Ubi Road 1.
Net property income (NPI) for 3Q17 declined by 3.7% to $13.4 million while distributable income fell 5.9% to $8.3 million.
As at Sept 30, the multi-tenancy and overall portfolio occupancy levels were at 80.4% and 88.4% respectively. During the quarter, the manager also secured 171,247 sf of renewals with direct tenants.
The weighted average lease terms to expiry for master leases and for sub-tenancies stood at 2.1 years and 2.4 years respectively for the quarter.
In 3Q17, the divestment of 218 Pandan Loop was completed at $14.8 million, about 9.6% higher than the original purchase price of $13.5 million.
The net sales proceeds from the divestment was used mainly to reduce the trust’s existing borrowings and lower its recurring financing costs.
Earlier this year, the trust launched a rights issue, raising $80.2 million. The proceeds from the rights issue has been fully utilised to repay maturing short-term borrowings, lowering the gearing from 43.2% as at Dec 31 2016 to 36.0% as at Sept 30.
The trust’s weighted average borrowing maturity was 1.5 years, and $23.9 million in revolving credit facilities remained unused at the quarter end.
SREIM says it will continue to be proactive in rebalancing and strengthening its portfolio, despite the challenging overall market.
Units in Sabana REIT closed at 47 cents.
