Another property acquisition for Sabana Shari’ah Compliant REIT (By IFN)

SINGAPORE: Sabana Real Estate Investment Management announced the acquisition of an industrial building in the city state for SG$61 million (US$49.03 million), to be injected into its Sabana Shari’ah Compliant Real Estate Investment Trust (REIT).
The five-story building, bought from local food packaging manufacturer Ban Teck Han Enterprise Company, is located within the Serangoon North Industrial Estate which houses a cluster of industrial facilities.

The acquisition will bring the total number of properties in the REIT’s portfolio to 21 from 20. Sabana expects to complete the acquisition in the fourth quarter of this year.

In a statement, Sabana said that the four-year-old property has a good sub-tenancy profile comprising multinational corporations. “The transaction is expected to benefit unitholders by improving asset and tenant diversification to reduce the reliance of Sabana Shari’ah Compliant REIT’s income stream on any single asset or lessee. The transaction will also increase the weighted lease tenor of the REIT’s portfolio and reduce the REIT’s lease expiry concentration in 2013,” it said. Its existing portfolio expires in approximately 39.7 years, while the new property has a balance land tenor of 44.2 years.

Sabana also said that it intends to fund the acquisition through debt. Touted as the largest listed Shariah compliant REIT by assets globally, the REIT raised SG$664.4 million (US$533.98 million) in gross proceeds during its initial public offering in November 2010.

In July this year, S&P, rated the REIT at ‘BBB-’ with a stable outlook, reflecting the trust’s good quality and well-located industrial property assets, in addition to its stable cash flow and occupancy rate of 99%. However, it noted that: “Sabana’s limited geographic and tenant diversity and somewhat limited financial flexibility temper these strengths. The short record of the manager operating the REIT through a property cycle remains a credit weakness. We assess the REIT’s business risk profile as ‘satisfactory’ and its financial risk profile as ‘intermediate’.”

See: http://redmoney.newsweaver.co.uk/13194ppoc1bh38rwoni3wx?email=true&a=6&p=26521115&t=21794845