Sabana Shari'ah REIT

(05-08-2013, 08:54 AM)HitandRun Wrote: Eh... Greenrookie

The error in your Sabana report in the number of months lah.... Previous financial year for them was 14 or 15 months....

No wonder!! Thank you!

S&P a lot more overly optimistic than many here on their ability to manage the Nov-13 lease renewals??


STANDARD & POOR’S REAFFIRMS LONG‐TERM CORPORATE CREDIT RATING, MAINTAINS STABLE OUTLOOK ON SABANA REIT
....S&P expects the Trust to successfully manage its upcoming lease expiry in 2013 and 2015....

The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) said it plans to buy a property located at 508 Chai Chee Lane, Singapore 469032 from Advanced Micro Devices (Singapore) Pte Ltd for $68.2 million.

The property is a seven‐storey light industrial building with two basement storeys, located at Chai Chee Lane, off Bedok North Road and Bedok North Avenue 1. Completed on 2 December 2002 with a built‐up gross floor area of about 327,574.70 square feet, the property is a JTC leasehold estate of 30 + 29 years tenure commencing from 16 April 2001. Land area of the site is around 113,689.50 square feet, with a remaining tenure of 46.5 years.

The price comprises $59.5 million for the property as well as $7.7 million upfront land premium payable to JTC for the balance of the first term (about 17.5 years) on JTC's approval and other costs.

If the acquisition follows through, both parties will enter into a lease agreement in which Advanced Micro Devices will lease back at least 50% of the total rentable area of the property.

(23-08-2013, 07:44 PM)felixleong Wrote: The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) said it plans to buy a property located at 508 Chai Chee Lane, Singapore 469032 from Advanced Micro Devices (Singapore) Pte Ltd for $68.2 million.

The property is a seven‐storey light industrial building with two basement storeys, located at Chai Chee Lane, off Bedok North Road and Bedok North Avenue 1. Completed on 2 December 2002 with a built‐up gross floor area of about 327,574.70 square feet, the property is a JTC leasehold estate of 30 + 29 years tenure commencing from 16 April 2001. Land area of the site is around 113,689.50 square feet, with a remaining tenure of 46.5 years.

The price comprises $59.5 million for the property as well as $7.7 million upfront land premium payable to JTC for the balance of the first term (about 17.5 years) on JTC's approval and other costs.

If the acquisition follows through, both parties will enter into a lease agreement in which Advanced Micro Devices will lease back at least 50% of the total rentable area of the property.

Cool...This will be sabana 2nd largest property with NLA of 290,000ft(from AMD website)


A quick calculation:
GIven AMD manufacturing business, I consider it a high tech industry, but lets use the $25psf (av. for sabana high tech proerties is $27), and general industry av. of $15

Assume its not a triple net lease, Since they mentioned about third parties, and AMD leasing at least 50%, using a margin 0.85, will yield a NPI of 3.6 million to 6.1 million, and that will be 4.5% to 7.7% of existing NPI, DPU will increase, AFter subtracting other costs, by $0.004 to $0.0071 in a year.

YIeld of purchase (not accounting for performance fees, and other costs) will be between 5.2% to 9%, quite prudent and value for money if you ask me.

Assume, they use some cash and take 60 million loan, gearing will then increase to about 40.4%, hmm... thought they say they will not break the 40%?

The manager seems to be keen to expand its AUM to make more management fees and acquisition fees.
They promised to its unit holders the leverage will be kept below 40% ?
Many industrial buildings are being built and many are moving to Iskandar and they are still buying Ind. properties at this time ?

(23-08-2013, 10:19 PM)cfa Wrote: The manager seems to be keen to expand its AUM to make more management fees and acquisition fees.
They promised to its unit holders the leverage will be kept below 40% ?
Many industrial buildings are being built and many are moving to Iskandar and they are still buying Ind. properties at this time ?

a performance fee of 0.5% per annum of the Net Property Income in each relevant year,
provided Sabana Shari’ah Compliant REIT achieves at least 10.0% in annual growth in
DPU over the previous financial year1

Performance fees is reasonable and modest compared to soilbuild reit and cambridge, the 10% improvement in DPU might not be meet.

DPU 2012, 9.28cents
to get performance fees 2013 DPU to be 10.2 cents.

1H DPU 4.81
2H need to 5.39

each q need to be 2.69cents. Even with the most optimistic projection, they will not get their performance fees for 2013.

If they could, it means my yield will be about 9%, I gladly compensate them from a 1-off lowering of DPU, for their performance.

Performance fees will be 4.5 million if it does come into the picture, not exorbitant in my opinon.

There is no mention of acquisition fees in the prospectus, I assume there is none, and this is what drawn me to invest in sabana after comparing a number of industrial reits... Please alert me to the acquistion fees if I have missed it, I can be scatteredhead at times

(23-08-2013, 09:52 PM)Greenrookie Wrote:

(23-08-2013, 07:44 PM)felixleong Wrote: The manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) said it plans to buy a property located at 508 Chai Chee Lane, Singapore 469032 from Advanced Micro Devices (Singapore) Pte Ltd for $68.2 million.

The property is a seven‐storey light industrial building with two basement storeys, located at Chai Chee Lane, off Bedok North Road and Bedok North Avenue 1. Completed on 2 December 2002 with a built‐up gross floor area of about 327,574.70 square feet, the property is a JTC leasehold estate of 30 + 29 years tenure commencing from 16 April 2001. Land area of the site is around 113,689.50 square feet, with a remaining tenure of 46.5 years.

The price comprises $59.5 million for the property as well as $7.7 million upfront land premium payable to JTC for the balance of the first term (about 17.5 years) on JTC's approval and other costs.

If the acquisition follows through, both parties will enter into a lease agreement in which Advanced Micro Devices will lease back at least 50% of the total rentable area of the property.

Cool...This will be sabana 2nd largest property with NLA of 290,000ft(from AMD website)


A quick calculation:
GIven AMD manufacturing business, I consider it a high tech industry, but lets use the $25psf (av. for sabana high tech proerties is $27), and general industry av. of $15

Assume its not a triple net lease, Since they mentioned about third parties, and AMD leasing at least 50%, using a margin 0.85, will yield a NPI of 3.6 million to 6.1 million, and that will be 4.5% to 7.7% of existing NPI, DPU will increase, AFter subtracting other costs, by $0.004 to $0.0071 in a year.

YIeld of purchase (not accounting for performance fees, and other costs) will be between 5.2% to 9%, quite prudent and value for money if you ask me.

Assume, they use some cash and take 60 million loan, gearing will then increase to about 40.4%, hmm... thought they say they will not break the 40%?

This acquisition seems like a good investment yield for all unit holders. I have checked the location - convenient.

The management is likely to get an attractive Islamic bank loan interest. With inflation, the rent is likely to increase which will benefit unit holders in the long run.

The problem is there is a big supplies of ind. properties and rentals are heading south now, why still want to buy more ?

I think management should be more conservative instead, if interest rates goes up even 40% gearing can be painful.
I wish their gearing was closer to 30%

give what they have done I think a rights or placement could be likely within the next 12-18 months?

The second impending problem for a highly geared REIT is that their valuation may drop due to a higher discount rate basis for property valuation. A 35% gearing now may mean a future gearing of 50% when their property is revalued.