Sabana Reit posts slightly lower portfolio occupancy of 85.2% in Q1

SABANA Industrial Real Estate Investment Trust (Reit) clocked a portfolio occupancy of 85.2 per cent for the first quarter of 2022, just slightly lower than the 85.4 per cent occupancy rate in the previous quarter, said the company in an interim business update provided through a bourse filing on Thursday (Apr 21).

It also signed 11,786 square feet (sq ft) of new leases and renewed 208,633 sq ft of leases. Out of the renewed leases, 4 per cent had higher rental rates, achieving positive rental reversion.

According to Sabana Reit , this is the eighth quarter over the past 9 quarters where positive reversion was achieved.

As for leases due to expire this year, 44.1 per cent has been renewed.

The Reit also indicated that no master lease would be expiring until 2023, and it is engaging with key tenants whose leases are expiring that year for them to sign on for longer term leases.

Sabana's weighted average lease expiry remains unchanged at 2.7 years as of end-March.

Its industrial unit at 30 and 32 Tuas Avenue 8 is under advance lease negotiation and lease documentation with a new master tenant.

Multi-tenanted properties made up 88.7 per cent of the Reit's gross rental income in Q1, higher than the 86.7 per cent for the quarter ending in September, as was reported in its previous business update in October last year.

By asset type, high-tech industrial properties accounted for 60.1 per cent of gross rental income, followed by warehouses and logistics properties at 26.5 per cent.

With the securing of a S$150 million sustainability-linked loan, as well as earlier refinancing exercises to convert all its loans to unsecured, Sabana said that 100 per cent of its portfolio is now unencumbered, which means that these assets are not subjected to a legal claim by another entity that could be used to fulfil the company's financial obligations.

Its total borrowings have reduced to S$305.5 million at the end of March this year, compared with S$315.5 million in the previous quarter. This has brought down its overall leverage to 34.8 per cent, as opposed to 35 per cent previously.

Close to 73 per cent of its borrowings are on a fixed rate, with an average term of 2.7 years.

Going forward, Sabana said it will continue enhancing its available assets, a strategy that was laid out in January this year when it announced its financial results for FY2021.

Its second major asset enhancement project at 1 Tuas Avenue 4 is targeted to be carried out in phases for up to 350,000 sq ft in gross floor area.

An expression of interest for a build-to-suit project was conducted in early 2022 and architects have since been invited to present design concepts, a floor efficiency plan and costs, said the Reit. It is also holding discussions with prospective tenants, including building for a multi-tenancy concept.

Sabana's chief executive Donald Han said that Singapore's growth outlook for 2022 is uncertain due to rising interest rates, geopolitical uncertainties and higher inflation.

"As a small Reit navigating through the current inflationary environment, we are keeping a close watch on rising costs. For this reason, we are proactively taking measures to reduce overall utility consumption across our portfolio and are initiating this process at 508 Chai Chee Lane," he said.

"This will allow us to mitigate the impact from rising energy prices in the medium term and better future-proof the Reit over the longer run to deliver value for our unitholders."

Units of Sabana Reit closed flat at S$0.45 on Thursday.