Sabana Reit's distribution per unit in Q1 unchanged

Lower contributions from some of its properties dented results for landlord Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) in its first quarter.

Distribution per unit was flat at 0.88 cent, due to the manager foregoing 20 per cent of its base fees. DPU would have been 0.86 cent, up from 0.80 cent from a year earlier, when it waived 75 per cent, or $944,000, of base fees.

Income available for distribution slipped 0.8 per cent to $9.2 million in the three months to March 31, compared with the same period a year earlier. Gross revenue slid 4.4 per cent to $21 million due to lower contribution from some properties and non-contribution from the vacant 1 Tuas Avenue 4. This was partially offset by the recovery of rental arrears from the previous master tenant of 6 Woodlands Loop - divested in March 2018 - and higher contribution from 10 Changi South Street 2 and 39 Ubi Road 1.

Property expenses, due to the recovery of rental arrears from 6 Woodlands Loop, lower impairment losses from the vacated 1 Tuas Avenue 4 and reduced expenses from the divestment of 218 Pandan Loop in the third quarter last year, fell 25.8 per cent. This helped net property income grow 9.4 per cent to $14.6 million from a year earlier.

Chief executive Donald Han said challenging market conditions like continued oversupply and high vacancies, means overall reversionary rent for 2018 is likely to stay negative. But he believes ramped-up marketing efforts to bring in new tenants and attempts to meet and connect with existing main tenants will help drive occupancy and rental.

He hopes to raise occupancy this year close to the rate of 88.9 per cent as at the fourth quarter last year, up from 84.1 per cent.

  • AT A GLANCE

  • Gross revenue: 

    $21 million (-4.4%)

  • Net property income:

    $14.6 million (+9.4%)

  • Distribution per unit:

    0.88 cent (unchanged)

The company is also considering more divestments, and using the proceeds to pare down loans (it has an aggregate leverage of 38.1 per cent) and possibly pursue renovations like at New Tech Park, he said.

Sabana Reit units closed 0.5 cent down at 42.5 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on April 24, 2018, with the headline 'Sabana Reit's distribution per unit in Q1 unchanged'. Print Edition | Subscribe