Sabana REIT's property near Serangoon, New Tech Park. (Photo: REITsWeek)

Sabana REIT has utilised SGD60 million (USD42.5 million) from a recent rights issue towards partly repaying an existing SGD75 million commodity murabaha facility that is due in August 2017.

The commodity murabaha is a Shari’ah-compliant financing facility that has been undertaken in line with Sabana REIT’s status as a Shari’ah-compliant REIT.

The rights issue, which raised some SGD80.2 million, was originally executed in respect of the REIT’s proposed acquisition of 107 Eunos Avenue 3, 72 Eunos Avenue 7 and 47 Changi South Avenue 2 respectively.

However these acquisitions are only expected to be completed before the end of 2Q 2017, said Sabana REIT in a statement on 6 February.

“As stated in the offer information statement, pending deployment of the net proceeds from the rights issue for the acquisitions, the net proceeds may be deposited with banks and/or financial institutions, or be used by the manager for repayment of Sabana REIT’s short-term borrowings”, Sabana REIT added.

As such SGD16.5 million meant for the acquisitions will be placed in short-term bank deposits.

A further SGD3.7 million will be deployed towards paying underwriting commission, and other professional fees relating to the rights issue, said the REIT.

Hence the acquisitions of 107 Eunos Avenue 3, 72 Eunos Avenue 7 and 47 Changi South Avenue 2 are expected to be financed by a combination of existing borrowings, new borrowings, internal cash resources, the SGD16.5 million in short-term bank deposits, and sale proceeds from Sabana REIT’s proposed divestment of 218 Pandan Loop, the REIT added.

Should there be any deviation from the stated use of proceeds, Sabana REIT’s manager has indicated that it will be making an announcement on the matter.

Units of Sabana REIT finished the trading day about 1.1% higher from its previous close on the Singapore Exchange to end at SGD0.43.

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.