Sabana Shari'ah REIT

While one factor is indeed the REIT manager inability to prop up the rent, there are still other reasons. For one the industrial property sector is currently in the doldrums and if i recalled, Sabana IPOed itself in the upturn of the property cycle which meant lofty valuations for its property.

This can explain why NAV has fallen so much.

(12-08-2017, 01:02 PM)CY09 Wrote: While one factor is indeed the REIT manager inability to prop up the rent, there are still other reasons. For one the industrial property sector is currently in the doldrums and if i recalled, Sabana IPOed itself in the upturn of the property cycle which meant lofty valuations for its property.

This can explain why NAV has fallen so much.

Could i also add that the NAV was also propped up by "rental support" from the properties it bought.

(12-08-2017, 02:07 PM)weijian Wrote:

(12-08-2017, 01:02 PM)CY09 Wrote: While one factor is indeed the REIT manager inability to prop up the rent, there are still other reasons. For one the industrial property sector is currently in the doldrums and if i recalled, Sabana IPOed itself in the upturn of the property cycle which meant lofty valuations for its property.

This can explain why NAV has fallen so much.

Could i also add that the NAV was also propped up by "rental support" from the properties it bought.

yes of cos! :

can add in "STRONG" rental support @ PEAK OF Property cycle/Valuation! 

with "STRONG" earnings, the value is sold/IPO to investors as "HIGH" too!

Low occupancy more likely because of shari'ah ruling on tenant type of business. If ESR buy and delist then properties is freed to any tenant and the rental potential is huge.

(13-08-2017, 10:30 AM)laksaman57 Wrote: Low occupancy more likely because of shari'ah ruling on tenant type of business. If ESR buy and delist then properties is freed to any tenant and the rental potential is huge.

I read "non Sharia-compliant companies such as casinos, and alcohol and tobacco companies. "

How would this be huge if only this ? 

Purely my own opinion, the vacancy rate at Sabana is about the same as the industrial property segment (11.3%). If ESR is buying based on its ability to improve the vacancy rate, it has to mean that ESR's management is confident on its own ability to attract more tenants (same skill level as Mapletree or Ascendas) or it is hoping for an uptick of the industrial segment to boost vacancy rate.

http://www.jtc.gov.sg/industrial-propert...-rate.aspx

Based on what JTC is painting, i doubt there will be an impending uptick for the industrial properties segment. Evidence by Table 2, a significant amount of industrial space area built during the recent boom has not been filled up; on the contrary, more spaces seem to be added to the vacancy pool. With Singapore not growing that rapidly, I wont be surprised to see higher vacancy rates in the near term. If i were ESR, I will wait for 1-2 more years, wait for Sabana to revalue its property lower then snap it out.

From the JTC table, it also reminds me of the days when Industrial developers (e.g Oxley) used to make sales pitches telling people to buy an industrial unit as they can obtain rental yields of 6-8%; and now when I go around Ubi, these units are completed and vacant

   

The overall occupancy rate on downtrend due to over supply. However, from DPU perspective, some of the good Reit has perform well despite facing this challenge.

Sabana DPU has been on downtrend for 5 years due to:

1. Financial engineering (Master lease not renew lease)
2. Lousy Reit Manager
3. Buy property at high price (not yield accredit)

(13-08-2017, 01:16 PM)Ray168 Wrote: The overall occupancy rate on downtrend due to over supply. However, from DPU perspective, some of the good Reit has perform well despite facing this challenge.

Sabana DPU has been on downtrend for 5 years due to:

1. Financial engineering (Master lease not renew lease)
2. Lousy Reit Manager
3. Buy property at high price (not yield accredit)

took a lot of guts, effort and time for minority activist to get acknowledgement from the management for that 3 reasons!!

kudos!!

SGX to review practices in real estate valuation
PUBLISHED
AUG 18, 2017, 5:00 AM SGT

http://www.straitstimes.com/business/com...-valuation

........................It also follows news earlier this year that Sabana Shari'ah Compliant Industrial Reit's planned move to acquire a property in Changi South Avenue from its sponsor Vibrant Group had drawn the ire of some unit holders, who questioned the valuation reports made by three houses.
Mr Kevin Xayaraj, chief executive and executive director of the Reit's manager, has tendered his resignation, while the proposed deal has been terminated.

(27-08-2017, 10:31 PM)Boon Wrote: SGX to review practices in real estate valuation
PUBLISHED
AUG 18, 2017, 5:00 AM SGT

http://www.straitstimes.com/business/com...-valuation

........................It also follows news earlier this year that Sabana Shari'ah Compliant Industrial Reit's planned move to acquire a property in Changi South Avenue from its sponsor Vibrant Group had drawn the ire of some unit holders, who questioned the valuation reports made by three houses.
Mr Kevin Xayaraj, chief executive and executive director of the Reit's manager, has tendered his resignation, while the proposed deal has been terminated.

The sad thing is that Singapore Institute of Surveyors and Valuers (SISV) still has not comment if the valuation done is right or wrong... it just said they wanted to review current practice. 

It is very obvious (not coincident, I think) the 3 valuer came out the same valuation for the said property. 

On the other hand, I think the trustee also is sleeping or ineffective. No question was raise by trustee to The Manager if the valuation is credible. The trustee shall protect the investors right but I don't see it does her duty.