Sabana Reit’s occupancy falls to 83%; more staff resign from manager amid internalisation uncertainties

SABANA Industrial Real Estate Investment Trust (Sabana Reit) has reported a decline in portfolio occupancy in the first quarter of 2024, due to the repossession of properties at Penjuru Lane.

The manager said in a business update on Monday (Apr 15) that its portfolio occupancy slipped from 91.2 per cent in Q4 2023 to 83 per cent in Q1 2024, due to the repossession of 33 and 35 Penjuru Lane, which were previously master-leased.

Meanwhile, the manager noted it has faced high staff attrition amid the uncertainties following Quarz Capital’s bid to internalise the manager function of the Reit.

The total resignation rate for the manager since the internalisation bid began last June has climbed to 47.6 per cent as at Apr 15. While some replacements have been hired, not all vacancies are filled, and the manager said it will continue to “proactively hire to fill vacancies”.

Sabana Reit has also incurred over S$7.2 million in expenses in connection with holding extraordinary general meetings requisitioned for the purpose of internalisation, as well as internalisation expenses.

Donald Han, chief executive officer of the manager, said it has been a “very difficult” first quarter for the Reit, amid the uncertainties arising from the internalisation process.

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“These challenges have been compounded by the unexpected turn of 33 and 35 Penjuru Lane repossession on Mar 8, 2024, where portfolio occupancy slid to 83 per cent,” he added.

Excluding the Penjuru Lane properties, portfolio occupancy would have remained stable at 91.3 per cent.

Sabana Reit filed a claim last November against Kleio One-Solution for possession of the Penjuru lane premises and payment of arrears in rent and other payments owed to the Reit. 

The Reit has taken possession of the properties, and is currently pursuing the necessary legal proceedings to claim approximately S$4 million from Kleio, the manager said.

Han noted that the remarketing of the properties is progressing well, and the manager is “anticipating offers from third party logistic firms”.

Meanwhile, the property at 1 Tuas Ave 4 – which has been undergoing an asset enhancement initiative – is progressing towards a June 2024 temporary occupation permit (TOP) date, and the manager is currently engaging prospective tenants. 

The Reit signed new and renewed leases totalling 139,426 square feet in the first quarter, with a positive 23.7 per cent rental reversion.

Aggregate leverage rose slightly to 35.6 per cent as at March 2024, from 34.3 per cent in December 2023. Average all-in financing cost climbed to 4.01 per cent from 3.89 per cent over the same period.

Units of Sabana Reit closed unchanged at S$0.365 on Monday, before the business update.