Analysis: Sabana REIT’s ‘strategic review’ update yields further questions

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Sabana REIT announced on 25 November that it is no longer in ‘exclusive discussions’ with the manager of ESR-REIT, dashing hopes of a consolidation exercise that many had hoped would benefit both REITs.

Particularly concerned on these developments were investors of Sabana REIT, who have witnessed four consecutive years of falling distribution per unit (DPU) annually since 2013.

In line with this retardation, units of Sabana REIT have fallen by as much as 67.5% from SGD1.17 in April 2013 to SGD0.34 in December 2016.

Unit prices of the REIT have since recovered to trade within the SGD0.42 -SGD0.43 range within the last one week, but in the days leading up to the 25 November announcement, Sabana REIT slid sharpy from SGD0.45 to SGD0.415.

Does the recent correction in prices represent an opportune buying opportunity given its seemingly attractive yield currently, or is the REIT a sinking ship?

We take a look at a number of factors surrounding Sabana REIT that you may want to examine should you be considering your options.

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About Author

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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