Sabana REIT's logistics facility at Tai Seng Drive, Singapore. (Photo: REITsWeek)Sabana REIT's logistics facility at Tai Seng Drive, Singapore. (Photo: REITsWeek)

Singapore-listed industrial REIT, Sabana Shari’ah Compliant REIT, announced on 18 April that it has achieved a distribution per unit (DPU) of 1.33 Singapore cents for its 1Q 2016, a fall of 25.3% as compared to the 1.78 cents delivered in 1Q 2015.

Distributable income for the period which spanned 1 January 2016 to 31 March 2016 was SGD9.77 million, a 24.7% decrease over the SGD12.97 million achieved in the corresponding period of 2015.

The distribution numbers came on the back of a 6.9% and 18.4% decrease in gross revenue and net property income that came in at SGD25.36 million and SGD18.58 million respectively.

As at 31 March 2016, portfolio occupancy increased to 90.0% based on 21 properties, from 87.7% based on 23 properties, as at 31 December 2015, after two properties were divested in March 2016. Weighted average lease expiry (WALE) for master leases stood at 3.0 years while WALE for sub-tenancies was at 31.6 months as at 31 March 2016.

Sabana REIT had total outstanding borrowings of SGD444.3 million as at 31 March 2016 with all-in cost of borrowings at 4.2% per annum. Leverage as at April 2016 is approximately 39.0%.

“The manager expects market conditions to remain challenging”, said the REIT in a statement on the results. “With the softening of the global economic climate, heightening interest rates and over-supply of industrial space in Singapore, overall rentals for industrial space are likely to remain under downward pressure”, it said, adding that the REIT’s 1Q 2016 financial performance reflects the full impact of the negative rental reversions, higher vacancies and higher operating expenses.

Units of Sabana REIT finished the trading day about 0.7% higher from its previous close on the Singapore Exchange to end at SGD0.66.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.