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Sabana Industrial REIT - Offer Goes Live, Worth A Look

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

Sabana Industrial REIT / Equity Bottom-Up

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SPH REIT kicked off the current financial reporting season for S-REITs on 7 Jan 2022 with the release of its first quarter (ended 30 Nov 2021) business update. This was followed by Sabana Industrial Trust, which reported its second half and full year (ended 31 Dec 2021) financial results on 20 Jan 2022. 
Another 25 S-Reits have also confirmed that they will unveil results or business updates between Jan 24 and Feb 23 for their respective period ended Dec 31, 2021. Among them, 16 S-Reits would be reporting full-year financial results, 4 would be reporting first-half or third-quarter financial results, and another 5 would be providing quarterly business updates.

SPH Reit, in its Q1 FY2022 business update, reiterated its strategy to remain focused on maintaining high occupancy and generating sustainable cash flow while working in partnership with tenants. The Reit's portfolio occupancy rates maintained at 98.8 per cent for the quarter while portfolio weighted average lease expiry (WALE) improved to 5.5 years by net lettable area (NLA) and 2.9 years by gross rental income (GRI) from FY2021's WALE of 5.4 years by NLA and 2.7 years by GRI. 
The Reit remains cautiously optimistic despite the developments surrounding the Omicron variant. It noted resilient tenants' sales in Q1 FY2022 for its Singapore portfolio despite restrictions on dining-in. Occupancy rates for its Singapore portfolio also improved to 99.8 per cent from 98.9 per cent in Q4 FY2021, in line with its strategy of maintaining high occupancy and stabilised cashflow.

Sabana Industrial Reit (Sabana) reported a 14.4 per cent year-on-year increase in gross revenue for H2 FY2021, mainly due to higher occupancy rates from several properties across the portfolio. Net property income (NPI) also rose 10.4 per cent year on year on the higher revenue.

For the full year, the Reit's revenue and NPI increased 14.2 per cent and 16.4 per cent year on year respectively, compared to FY2020. This translated to a full year distribution per unit (DPU) of 3.05 cents, a 10.5 per cent year-on-year increase. 
The Reit manager noted that its focus on attracting tenants in expansionary sectors has led to the continued onboarding of companies from the electronics, healthcare, data centre, and logistics sectors in FY2021. Sabana's overall occupancy rate as at Dec 31, 2021 was 85.4 per cent, up from 76.5 per cent as at Dec 31, 2020 and the highest since 2018. During the year, Sabana announced the removal of its syariah compliance requirement to provide the Reit with access to more diversified funding sources and to enable it to appeal to a wider pool of tenants for its next phase of growth.  REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/full-steam-ahead-for-s-reits-earnings-season">read </a>the original version.
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    Schedule of expected S-Reits earnings or business updates


SPH REIT kicked off the current financial reporting season for S-REITs on 7 Jan 2022 with the release of its first quarter (ended 30 Nov 2021) business update. This was followed by Sabana Industrial Trust, which reported its second half and full year (ended 31 Dec 2021) financial results on 20 Jan 2022.  
Another 25 S-Reits have also confirmed that they will unveil results or business updates between Jan 24 and Feb 23 for their respective period ended Dec 31, 2021. Among them, 16 S-Reits would be reporting full-year financial results, 4 would be reporting first-half or third-quarter financial results, and another 5 would be providing quarterly business updates.

SPH Reit, in its Q1 FY2022 business update, reiterated its strategy to remain focused on maintaining high occupancy and generating sustainable cash flow while working in partnership with tenants. The Reit's portfolio occupancy rates maintained at 98.8 per cent for the quarter while portfolio weighted average lease expiry (WALE) improved to 5.5 years by net lettable area (NLA) and 2.9 years by gross rental income (GRI) from FY2021's WALE of 5.4 years by NLA and 2.7 years by GRI.  
The Reit remains cautiously optimistic despite the developments surrounding the Omicron variant. It noted resilient tenants' sales in Q1 FY2022 for its Singapore portfolio despite restrictions on dining-in. Occupancy rates for its Singapore portfolio also improved to 99.8 per cent from 98.9 per cent in Q4 FY2021, in line with its strategy of maintaining high occupancy and stabilised cashflow.

Sabana Industrial Reit (Sabana) reported a 14.4 per cent year-on-year increase in gross revenue for H2 FY2021, mainly due to higher occupancy rates from several properties across the portfolio. Net property income (NPI) also rose 10.4 per cent year on year on the higher revenue.

For the full year, the Reit's revenue and NPI increased 14.2 per cent and 16.4 per cent year on year respectively, compared to FY2020. This translated to a full year distribution per unit (DPU) of 3.05 cents, a 10.5 per cent year-on-year increase.  
The Reit manager noted that its focus on attracting tenants in expansionary sectors has led to the continued onboarding of companies from the electronics, healthcare, data centre, and logistics sectors in FY2021. Sabana's overall occupancy rate as at Dec 31, 2021 was 85.4 per cent, up from 76.5 per cent as at Dec 31, 2020 and the highest since 2018. During the year, Sabana announced the removal of its syariah compliance requirement to provide the Reit with access to more diversified funding sources and to enable it to appeal to a wider pool of tenants for its next phase of growth.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Full steam ahead for S-Reits' earnings season