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Sabana Shari'ah REIT
27-11-2017, 05:51 PM.
Post: #921
RE: Sabana Shari'ah REIT
REITs are pretty much a "take it or leave it" investment case. This is mainly due to the special features of the REIT structure, namely the requirement to distribute most of the cash earnings to the unitholders, the need to obtain unitholder approval to change the fee structure, and the underlying assets being real estate which has a low return on capital.

This means that a change of control via an acquisition of a large minority stake is normally uneconomic: most of the cash is leaked to OPMI, you can't increase your fees without OPMI approval, and you can't juice up returns sufficiently because the underlying assets are low-return.

The effect is that incumbent REIT managers are in an excellent position to abuse unitholders. To date most REIT managers have been careful about the extent of the abuse as they know that if the REIT is punished too hard, it will trade at a large discount and it cannot raise money any more. So usually there is some meat left on the table so that the deal is (eventually) DPU-accretive.

Sabana is perhaps the exception that proves the rule as the deals were extremely DPU-negative over the long term. The abuse has been so large and so sustained that there is little hope of saving the REIT in its current form.

In some ways it resembles the "Dead Man Fund" run by William A. Steadman, described here:

https://longreads.com/2017/11/09/amerito...-steadman/

Essentially Steadman managed the funds so poorly that investors lost almost all their money. He had a captive board of trustees who did nothing while he churned the accounts and destroyed capital. But many investors stayed, because they were dead and couldn't redeem. To make things worse, since the dead investors' accounts were "inactive" they did not get account statements, so heirs didn't even know the accounts existed, and Steadman continued to drain the accounts.

The regulators? The SEC realized something was wrong as early as 1971, but it was only in 2012 that it shut the business down - 15 years after Steadman himself died. His daughter took over in 1998, but she didn't do any better - the funds lost 99% of their value under her watch.

Moral(s) of the story:

1. Principal-agent conflict: if the agent is unethical enough you will lose a lot of money. A Russian proverb made popular by Ronald Reagan: trust but verify.

2. Don't expect the government to protect you. By the time the bad guy is stopped, the damage has been done.

As usual, YMMV.
---
I do not give stock tips. So please do not ask, because you shall not receive.

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27-11-2017, 10:51 PM. (This post was last modified: 27-11-2017, 10:52 PM by opmi.)
Post: #922
RE: Sabana Shari'ah REIT
^^^ a bit OT: http://www.sut.com.sg/portfolio/pdf/fact...Dec-09.pdf <<< funds like that should be put to sleep long time ago. see inception date and returns since inception.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster

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30-11-2017, 03:46 PM.
Post: #923
RE: Sabana Shari'ah REIT
Hi,

Is there any difference between sabana sukuk bonds Vs the usual non sukuk bonds?

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12-12-2017, 04:12 PM.
Post: #924
RE: Sabana Shari'ah REIT
Countdown to CEO leaving office by year end. Hope it happen otherwise shareholder's ,including SSH, efforts go down the drain.

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26-12-2017, 07:04 PM. (This post was last modified: 27-12-2017, 09:27 AM by weijian.)
Post: #925
RE: Sabana Shari'ah REIT
They are given more that 6 months to find external replacement but to no avail.

Very doubtful that new CEO can turns around the Reit. Sian.

Sent from my SM-N910G using Tapatalk

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27-12-2017, 09:29 AM.
Post: #926
RE: Sabana Shari'ah REIT
Don't expect much from the new CEO etc - ultimately all depends on what ESR+Tong Jin Quan + friendly forces decide to do with this - vibrant is now out-voted and does not have the financial power to compete.

Interesting space though in the SREIT-third tier players - ESR corporate actions should be rerating factor.

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01-09-2018, 10:38 AM. (This post was last modified: 01-09-2018, 10:38 AM by weijian.)
Post: #927
RE: Sabana Shari'ah REIT
The default looks like cash flow neutral but it is a bad time to have 1 of your master tenant defaulting...

ISSUE OF NOTICE OF TERMINATION FOR DEFAULT ON RENTAL PAYMENT IN RELATION TO 10 CHANGI SOUTH STREET 2, SINGAPORE 486596  

Singapore, 31 August 2018 – Sabana Real Estate Investment Management Pte. Ltd., as manager of  Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (“Sabana REIT”, and as manager of  Sabana REIT, the “Manager”), refers to 10 Changi South Street 2, Singapore 486596 (the “Property”),  which is currently leased to Adviva Distribution Pte. Ltd. (the “Tenant”) under a lease agreement dated  15 December 2014 as supplemented by a supplemental lease agreement dated 30 November 2017  (collectively, the “Lease Agreement”), between HSBC Institutional Trust Services (Singapore) Limited,  in its capacity as trustee of Sabana REIT (the “Trustee”), and the Tenant.  The Manager wishes to announce that it has today issued a notice of termination to the Tenant, arising  from the Tenant’s failure to pay rent and other sums payable under the Lease Agreement.  

http://infopub.sgx.com/FileOpen/10_Chang...eID=523709

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01-09-2018, 10:50 AM. (This post was last modified: 01-09-2018, 10:55 AM by CY09.)
Post: #928
RE: Sabana Shari'ah REIT
The REIT is on very weak financial standing.

It has 142 million of debts to be repaid within a year and of which is a $100 million debt instrument of 4.25% per annum which matures on 2 Apr 2019. Yet, the trust is not conserving cash but paying out its entire free cash flow. Its cash balance is only $7.8 Million.

The trust had to divest its properties and, in the process registering valuation loss, to repay its past maturing debts.

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03-09-2018, 09:09 AM.
Post: #929
RE: Sabana Shari'ah REIT
(01-09-2018, 10:38 AM)weijian Wrote: The default looks like cash flow neutral but it is a bad time to have 1 of your master tenant defaulting...

ISSUE OF NOTICE OF TERMINATION FOR DEFAULT ON RENTAL PAYMENT IN RELATION TO 10 CHANGI SOUTH STREET 2, SINGAPORE 486596  

Singapore, 31 August 2018 – Sabana Real Estate Investment Management Pte. Ltd., as manager of  Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (“Sabana REIT”, and as manager of  Sabana REIT, the “Manager”), refers to 10 Changi South Street 2, Singapore 486596 (the “Property”),  which is currently leased to Adviva Distribution Pte. Ltd. (the “Tenant”) under a lease agreement dated  15 December 2014 as supplemented by a supplemental lease agreement dated 30 November 2017  (collectively, the “Lease Agreement”), between HSBC Institutional Trust Services (Singapore) Limited,  in its capacity as trustee of Sabana REIT (the “Trustee”), and the Tenant.  The Manager wishes to announce that it has today issued a notice of termination to the Tenant, arising  from the Tenant’s failure to pay rent and other sums payable under the Lease Agreement.  

http://infopub.sgx.com/FileOpen/10_Chang...eID=523709

This is hilarious.

The building was bot in 2014 thru a sale&leaseback for $55mio.
In 2016, Sabana spent $7.4mio on "additions & alterations work providing additional GFA of 49,415 sq ft"
In 2017, supplementary lease was signed with master tenant "which will generate an additional S$1.0 million in rental p.a.". Valuers valued this property @ 62mio.
In 2018, tenant defaulted.

Such entertainment! esp with the unitholders giving the manager the share issuance mandate again!

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03-09-2018, 06:09 PM.
Post: #930
RE: Sabana Shari'ah REIT
(01-09-2018, 10:50 AM)CY09 Wrote: The REIT is on very weak financial standing.

It has 142 million of debts to be repaid within a year and of which is a $100 million debt instrument of 4.25% per annum which matures on 2 Apr 2019. Yet, the trust is not conserving cash but paying out its entire free cash flow. Its cash balance is only $7.8 Million.

The trust had to divest its properties and, in the process registering valuation loss, to repay its past maturing debts.

Interestingly enough, its bond are trading almost near par after dropping to about 92 cents on the dollar in 2017.

https://www.bondsupermart.com/main/bond-...6TD3000006
http://theasiareport.com - Reflections From Finding Value In Asia

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