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SABANA Shari'ah Compliant Industrial Reit (real estate investment trust) on Monday posted a 14.4 per cent drop in distributable income to S$11 million for the three months ended Dec 31, 2015, dragged down by higher revaluation loss on investment properties.
Net change in fair value of investment properties came in at a loss of S$116.7 million, compared with S$7.5 million loss a year ago.
The Reit said this was mainly due to higher revaluation loss of the properties based on independent valuations undertaken by the independent valuers as at end-December 2015, compared to end-December 2014.
Distribution per unit (DPU) for Q4 was 1.5 Singapore cents, down 15.7 per cent from the year-ago period.
On an annualised basis, DPU fell by 15.7 per cent to 5.95 Singapore cents for the fourth quarter.
Net property income dropped 10.3 per cent to S$16.3 million, due to lower gross revenue that arose from negative rental revisions for certain master leases renewals in Q4 2015, overall lower occupancy levels, higher property expenses and higher property tax and land rent expenses.
Gross revenue for the quarter slid 2.9 per cent to S$24.6 million.
For the full year, the group's distributable income slid 2.9 per cent to S$50.1 million, while both DPU and annualised DPU dropped 6.5 per cent to 6.85 Singapore cents.
Net property income dropped 1.8 per cent for FY2015 to S$71.6 million.
The manager of the Reit, Sabana Real Estate Investment Management, said it expects the group's near-term financial performance to be weaker than the preceding quarters, due to negative rental reversions for some of the master leases renewed, as well as higher vacancies and higher operating expenses, arising from the conversion of three more properties into multi-tenanted buildings.
"Assuming successful legal completion of the divestment of two properties, namely 3 Kallang Way 2A and 200 Pandan Loop in Q1 2016, estimated net proceeds of S$53 million will be used to pare down part of the S$138.0 million Commodity Murabaha Facilities due for refinancing in November 2016. Consequently, aggregate leverage will drop from 41.7 per cent as at December 31, 2015, to approximately 39 per cent," it said.
The manager said it has started negotiations with the lenders on the refinancing of the maturing Commodity Murabaha Facilities and targets to complete the refinancing exercise by Q3 this year.
With about 11 months to go before the expiry of four master leases, the manager said it is working towards renewing or securing new master leases for three of them.
The remaining property will likely be converted into a multi-tenanted building.
While Singapore's economy is expected to remain subdued and market conditions to be very challenging for 2016, the manager said it remains committed in its efforts to improve the portfolio occupancy, implement productivity and cost control measures, and to prudently manage the Reit's capital structure.