Sabana Reit Q3 DPU dips to 0.77 Singapore cent

A DROP in rental revenue on the back of lower occupancies and negative rental reversions for some master leases earlier signed took a toll on results for industrial landlord Sabana Reit in its third quarter.

Distribution per unit dipped to 0.77 Singapore cent from 0.79 cent in the previous year, the group said on Friday. That came as Q3 income available for distribution slid 3.2 per cent to S$8.1 million from the previous year.

For the three months ended Sept 30, gross revenue shrank 4.8 per cent to S$19.9 million from the year-ago period, due mainly to lower contribution from certain multi-tenanted properties as a result of lower occupancies in the current period, negative rental reversions for certain master leases renewed in the fourth quarter of 2017, and absence of contribution from its property at 1 Tuas Avenue 4 following the surrender of the lease in the first quarter of 2018, among other reasons.

Net property income dropped 5.7 per cent to S$12.6 million from the previous year.

Overall, occupancy levels for the Reit stood at 81.4 per cent as at end-September 2018, compared to 84.5 per cent as at end-June 2018, reflecting vacancy in 21 Joo Koon Crescent, 9 Tai Seng Drive and 1 Tuas Avenue 4, the latter two of which are pending completion of divestment.

"If the divestment of these two properties had completed by Sept 30 2018, the occupancy levels would have stood at 85.1 per cent," the Reit manager said.

Separately, it also said that the Reit's trustee has also entered into master leases with Freight Links Express Logisticentre for 51 Penjuru Road, Freight Links Express Logisticpark for 33 & 35 Penjuru Lane, as well as with Crystal Freight Services Distripark for 18 Gul Drive.

This follows an exercise of the master lessees' option to renew their existing master leases. All three master lessees are subsidiaries of Vibrant Group, which is also the Reit sponsor and controlling shareholder of the manager.

The aggregate transaction value of the master leases is about S$11.53 million.

Without giving a breakdown for each of the three properties, the manager said: "Having considered the prevailing market conditions, Singapore's economic performance and attributes of the properties as well as the independent market report (by Suntec Real Estate Consultants), the manager is of the view that the agreed rental rate for each of the properties is in line with the prevailing market rents for similar properties in similar locations, and the entry into the master leases will provide continuing, predictable and stable cash flow and revenue to Sabana Reit." Sabana Reit units finished flat at S$0.415 on Friday.