Sabana Shari'ah REIT

4th Quarter results out. DPU plunged by nearly 10%.

DPU looks to be on a downtrend, it means management is not doing a good job at renewing those leases... they were probably done at a lower rate compared to before.
Quarterly DPU fell from last year's high of 2.41c to now 2.19c

on page 21
6 properties,multi-tenanted only 78.4% leased <---------- this is really bad

(22-01-2014, 06:24 PM)kichialo Wrote: 4th Quarter results out. DPU plunged by nearly 10%.

Seems like I made the right decision to divest.

It's only the beginning - expect Q1 2014 to be worse

Then 2015 is kaboom - huge lease expiry

Lousy management, so glad I sold it out one year plus ago

The magic of master lease is gone. The reit bought the properties at a much higher prices in exchange for a higher rentals for the master leases. The true color is out.

Looks like the counter hold up very well despite that. Probably the higher yield compensate the lower occupancy.

Now that the dust had settled, everyone have the full visibility of the 3 converted properties. That could be the reason why the price doesn't drop drastically.

In fact, current yield of 8 over % is still attractive to most people.

What I wrote at my blog:

In my earlier posts, I overestimated the management of sabana.

They had make acquisitions that are yield accretive with decent yield of 6-7%.

They have a performance fees structure that will only payout performance when DPU increase by 10%. If DPU increase 10%, I seriously do not have problem with them claiming their due rewards.

But alas, it’s quite obvious the management interest are not aligned with the minority shareholders and the capability is questionable too.

First, a placement that dilute existing shareholders holding, to buy a half vacant AMD building.

The results:

Pathetic increase of about 3 million gross revenue income that is matched by 3 million increase in property expenses, due mainly to the fact that Chai Chee property is a multi-tenant lease and 5 other become multi-tenant when the master lease didn’t renew master lease.

So it is very obvious that sabana is not able to exact good rental revisions even when it now operate a multi-tenant lease.

Also base management fees an trust fees will increase, due to the increase of asset valuation under management.

“Good job”, doing nothing would be far better than doing a expensive placement to buy an half vacant AMD when the industry space will see more supply over the next few years. Again it is quite clear that management would muddle along to squeeze more fees out of these value destroying exercise. They also also immediately cash out on their units in lieu of payment. Not interested in holding longer term.

So, what should I do?

It is definitely not a buy. It is a sell? Well, if u bought at 80 cents and is sitting on nice profits, it might be good to lock in profits and search for better options too.

It is sell even if its at a loss? Can they further destroy within the next year?

Well, I just need to collect this dividend and the next to break even if the price can be kept at 1.065.

Logically, I should hold. But the price might tumble even more. They have refinancing this year, and over the next 3 years. Would they do something stupid again?

To be fair, they did managed to increase the sub tenants by 5 over the last 3 months.

I think barring a increase in vacancy rate, the current yield of 8% is safe for the year.

I will hold for the time being. There is no attractive alternative that I can buy anyway either for yield or capital gains, at least not now.

(moderator, not sure if copying wholesale is a kinda of advertisement, I just lazy to edit anymore la... =p)

(24-01-2014, 09:34 AM)Greenrookie Wrote: ......, a placement that dilute existing shareholders holding, to buy a half vacant AMD building.

Sadly, this was the last straw that pushed me to divest a few months back.