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Sabana Reit says book value of property to be acquired not relevant for current deal

Sunday, February 19, 2017 - 17:29

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In another turn of the drama unfolding in Singapore's Reit space, Sabana Real Estate Investment (Reit) Management said that the book value of a property to be acquired by the Reit from its sponsor Vibrant Group is not relevant for the current acquisition.

IN another turn of the drama unfolding in Singapore's Reit space, Sabana Real Estate Investment (Reit) Management said that the book value of a property to be acquired by the Reit from its sponsor Vibrant Group is not relevant for the current acquisition.

The property at 47 Changi South Ave 2 was acquired by Vibrant Group in Mar 2011 for S$10.9 million and will be acquired by the Reit at S$23 million.

The latter figure had been arrived at by three valuation houses: Colliers, Knight Frank and Savills. A unitholder Jerry Low had filed a complaint to the Commercial Affairs Department (CAD) in early February on his misgivings over the objectivity and independence of the valuation.

In an exchange filing late on Friday night in response to queries by the Singapore Exchange, Sabana Real Estate Investment Management said that Vibrant Group had purchased the property for its own use, and hence the S$10.9 million book value represents the original cost of acquisition without accumulated depreciation.

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"As such, the book value is irrelevant and not the appropriate basis for comparison in the context of the current acquisition by Sabana Reit where the property valuation is arrived at based on the rental that the property will be generating over the next 10 years," it said.

The audit committee, after considering factors such as the rationale for the deal, its key terms, financial impact and valuation, is satisfied that the proposed acquisition is on market terms, and supports the Reit manager's view that the deal is in the interest of the Reit, it added.

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