Sabana REIT continues downward slide as questions remain over acquisitions

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Units of Sabana REIT have fallen by more than 7.5% since 9 May when it was announced that the CEO of its manager would step down.

This downward slide came despite reassurances of an ongoing “strategic review” and the issuance of a ‘Buy’ rating by a noted brokerage firm in Singapore, which has cited the REIT’s impending restructuring as a factor that would bode well for earnings in the quarters ahead.

Sabana REIT disclosed earlier in the month, amid yet another quarterly result of falling DPU and distributable income figures, that “business as usual is not an option” and that it is working towards addressing investor feedback.

In what could be construed as further demonstration of this commitment, the REIT also announced then that it has terminated the controversial plan to acquire 47 Changi South Avenue 2, which drew the ire of investors who questioned valuation methods on the property’s value.

“While the board maintains its view that the proposed acquisition would have been beneficial to the long-term interests of Sabana REIT and its unitholders, in light of the continuing feedback from unitholders about the proposed acquisition, Sabana REIT and Freight Links Properties [a subsidiary of the sponsor of Sabana REIT]have agreed to terminate the put and call option agreement entered into for the proposed acquisition”, said the REIT in a statement then.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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