16 April 2014

Sabana REIT 1Q FY 2014 Result

Sabana REIT announced a DPU of 1.88 cents for the quarter from 1 January 2014 to 31 March 2014, a 22% dip from the quarterly DPU generated in 1Q 2013. This corresponds to an annualised distribution yield of 7.05%, based on an annualized DPU of 7.62 cents and a closing price of S$1.080 per Unit on 15 April 2014.

The decline in DPU in 1Q 2014 is reflective of more difficult and challenging market conditions. The results for 1Q 2014 have been affected by the conversion of four master‐tenanted properties into multi‐tenanted properties in 4Q 2013, which led to a significantly lower overall occupancy rate for the multi‐tenanted properties.

Occupancy remains largely unchanged at 90.6% in 1Q 2014. Occupancy at 151 Lorong Chuan increased to 95.1% from 93.8%, while occupancy at 8 Commonwealth Lane rose to 74.3% from 68.6% in 4Q 2013. Looking ahead, Sabana REIT will continue to intensify their marketing and leasing efforts to improve the portfolio occupancy. In addition, they will look for opportunities to recycle their capital by divesting underperforming assets and use the sale proceeds to reinvest in new
acquisitions, pare down the debt and/or distribute capital gains from divestment to the shareholders.

Although the DPU for the 1Q 2014 had a 22% dip as compared to 1Q 2013, it is still a good portfolio for income investors who are looking at a distribution yield of 7.05%. Hopefully the management will try to improve the occupany rate to more than 90.6% which will in turn generate more distribution yield to the shareholders.

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