Sabana Reit Announces 4.5% Q-O-Q Growth In Distributable Income

Transcription

1. SABANA SHARI ’AH COMPLIANT INDUSTRIAL REAL ESTATE INVESTMENT TRUST (a real estate investment trust constituted on 29 October 2010 under the laws of the Republic of Singapore) SABANA REIT ANNOUNCES 4.5% Q-O-Q GROWTH IN DISTRIBUTABLE INCOME     Income available for distribution increased from S$8.9 million in 3Q 2016 to S$9.3 million in 4Q 2016 Rights Units were oversubscribed at approximately 209.1% with valid acceptances and excess applications coming in for a total of 649.6 million Rights Units Generated DPU of 0.88 Singapore cents. Excluding the Rights Issue, DPU for 4Q 2016 would have been at 1.25 Singapore cents which is 4.2% higher in comparison to 3Q 2016 Aggregate leverage of 43.2% as at 31 December 2016 is expected to fall by 3.2% to approximately 40.0% upon successful completion of the Rights Issue by 26 January 2017 Financial Highlights FY 2016 FY 2015 Variance (%) 4Q 2016 3Q 2016 Variance (%) Gross revenue 91,807 100,824 (8.9) 22,540 23,031 (2.1) Net property income (“NPI”) 56,942 71,605 (20.5) 13,894 13,911 (0.1) 36,949 50,135 (26.3) 9,258 8,858 4.5 4.171,2 5.992 (30.4) 0.881 1.20 (16.2) 5.013 6.85 (26.9) 1.253 1.20 4.2 (S$’000) Income available for distribution Distribution per Unit (“DPU”) (cents) (with effects of Rights Issue – as reported) Distribution per Unit (“DPU”) (cents) (without effects of Rights Issue – for comparison only) Singapore, 25 January 2017 – Sabana Real Estate Investment Management Pte. Ltd., the Manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (“Sabana REIT” or the “Trust”), today announced a distributable income of approximately S$9.3 million in 4Q 2016, which is 4.5% higher as compared to the previous quarter. The improvement in income available for distribution by 4.5% in 4Q 2016 in comparison to 3Q 2016 is attributable to lower straight line adjustments on rental income arising from less rent-free periods given to new and existing tenants and rental escalations on certain master tenants. With a distributable income of approximately S$9.3 million in 4Q 2016, this translates to DPU of 0.88 Singapore cents, based on approximately 1.053 billion units issued and to be issued as at 31 December 2016. Excluding the Rights Units of approximately 310.7 million units issuable as at 31 December 2016, DPU for 4Q 2016 would have 1 Based 1,053,083,530 Units issued and to be issued as at 31 December 2016 including the Rights Units of 310,712,244 issued by 26 January 2017 (the “Rights Issue”). 2 DPU for prior periods restated to reflect the effect of bonus element in the Rights Issue. 3 Based on 742,371,286 Units issued and to be issued as at 31 December 2016 excluding the Rights Units of 310,712,244 issued by 26 January 2017 (the “Rights Issue”).
2. been 1 .25 cents which is 4.2% higher than the DPU in 3Q 2016. The Rights Units were also oversubscribed at approximately 209.1% with valid acceptances and excess applications coming in for a total of 649.6 million Rights Units4. Gross revenue and NPI for the whole year dipped by 8.9% and 20.5% respectively due to negative rental revisions for certain master leases renewals in 4Q 2015, lower average portfolio occupancy largely arising from the conversion of 23 Serangoon North Avenue 5, 34 Penjuru Lane and 15 Jalan Kilang Barat into multi-tenanted lease arrangements and non-renewal of 218 Pandan Loop upon the expiry of their master leases in 4Q 2015, lower average occupancy and contribution from 39 Ubi Road 1 which was converted into multi-tenanted lease arrangements in 4Q 2016, expiry of rental support at 9 Tai Seng Drive in 2Q 2015 and lower contribution from the divestment properties which were divested in 1Q 2016. Lease Management for 4Q 2016 Multi-tenancy occupancy levels were at 80.1% for the quarter ended 31 December 2016. On a q-o-q basis, the total portfolio occupancy level decreased slightly from 89.2% to 87.2% primarily due to the conversion of 39 Ubi Road 1 from master-lease arrangement to multi-tenanted lease arrangement. As at 31 December 2016, the weighted average lease term to expiry for master leases and weighted average lease term to expiry for direct and sub-tenancies increased from 2.5 years and 31.0 months to 2.9 years5 and 31.4 months respectively. Capital Management As at 31 December 2016, the Sabana REIT had total outstanding borrowings of approximately S$441.1 million. Weighted average all-in cost of borrowings was under 4.2% p.a., largely unchanged from 31 December 2015. Approximately 90.2% of the Trust’s outstanding borrowings are on fixed rate basis or have been hedged with profit rate swaps, an increase of 8.3% compared to 81.9% a year ago. During the quarter, aggregate leverage increased from 41.5% to approximately 43.2% mainly due to year-end revaluation loss on investment properties, but is expected to fall by 3.2% to approximately 40.0% upon successful completion of the Rights Issue by 26 January 2017. Outlook According to advance estimates released by the Ministry of Trade and Industry (MTI), the Singapore economy expanded by 1.8% in the fourth quarter of 2016 on a y-o-y basis. Based on a quarter-on-quarter seasonally-adjusted basis, overall GDP grew 9.1%, thus making a reversal from the 1.9% decline in the third quarter and averted a technical recession as industrial production increased in November 20166. In the latest 2016 quarterly survey by the Monetary Authority of Singapore, private sector economists expect growth to be at 1.4% in 2017 amidst a lacklustre global outlook. However, the economy is expected to grow by 1.5% next year, which is slightly lower than their forecast in September 2016 of 1.8% growth7. According to the 3Q 2016 industrial property market report by JTC, about 3.0 million sqm of industrial space is estimated to available till the end of 2017. In comparison with the past three years, this is more than the average 4 SGX announcement of the final results of the underwritten and renounceable Rights Issue was made on 20 January 2017. Weighted by gross revenue (master leases of 10 properties). 6 “Singapore’s economy grows 1.8% in Q4; 2016 GDP at 1.8%”. Channel NewsAsia. 3 January 2017. Web. 3 January 2017. 7 “Private economists slash forecasts for Singapore GDP growth to 1.4% for 2016, 1.5% for 2017: MAS survey”. The Business Times. 14 December 2016. Web. 14 December 2016. 5
3. annual supply and demand of approximately 1 .9 million sqm and 1.2 million sqm respectively which is likely to put further downward pressure on occupancy rates, prices and rentals8. The Group reported a deficit in total return after taxation and before distribution, for 4Q 2016 and for FY 2016, mainly due to revaluation loss on its investment properties against a backdrop of sluggish economic growth and oversupply of industrial space. Further to the announcements made between 8 December 2016 to 30 December 2016, gross proceeds from the approximate S$80.2 million Rights Issue will be partially used to fund the three proposed acquisitions9. For the proposed acquisition of the 47 Changi South Avenue 2, the Manager will be seeking Unitholders’ approval at an extraordinary general meeting of Unitholders to be held before 30 June 2017. The Manager targets to complete all three transactions by 30 June 2017. Pending deployment of the net proceeds from the Rights Issue to be completed by 26 January 2017, the net proceeds may, subject to relevant laws and regulations, be deposited with banks and/or financial institutions, or used for repayment of short-term borrowings or used for any other purpose on a short-term as the Manager may, in its absolute discretion, deem fit. Five master leases are to expire in 4Q 2017, three of which are Sponsor related properties. The Sponsor has indicated its commitment to exercise its options to renew the three master leases at prevailing market rents in line with those of similar properties in similar locations. On the divestment of 218 Pandan Loop announced on 5 December 2016, the Manager targets to complete the transaction by 31 March 2017. For the Commodity Murabaha Facility and Convertible Sukuk maturing in August 2017 and September 2017 respectively, the Manager has commenced discussions with the lenders and targets to complete the refinancing exercise ahead of their final maturity dates. The Manager will also continue to explore new ways to diversify funding sources and improve the Trust’s borrowings maturity profile. Despite the subdued outlook for the global economy and the Singapore industrial property market, the Manager will continue to stay proactive in managing the lease expiry profile and maintain rigorous marketing and leasing efforts to increase the Trust’s portfolio occupancy. The Manager is also very focused on actively managing the Trust’s cost and remains committed to enhancing the Trust’s portfolio to deliver a stable income stream to the Unitholders. 4Q 2016 Non-Shari’ah Compliant Income Sabana REIT will be allocating S$30,582 to Singapore Kadayanallur Muslim League, an organisation which has been providing community service since 1941. The funds will be utilised to support their rescue and relief efforts for the victims of Cyclone Vardah which took place on 12 December 2016 in Chennai and the north coastal district Tiruvallur in Tamil Nadu. Distributions to Unitholders Unitholders can expect to receive distributions for the period from 1 October 2016 to 31 December 2016 in cash on 28 February 2017. The closure of Sabana REIT’s transfer books and register of Unitholders will take place at 5pm on 3 February 2017. 8 “JTC Quarterly Market Report. Industrial Properties. Third Quarter 2016”. 3Q 2016. Web. 3Q 2016. SGX announcement of the proposed acquisitions of 72 Eunos Avenue 7, 107 Eunos Avenue 3 and 47 Changi South Avenue 2 was made on 8 December 2016, 14 December 2016 and 15 December 2016 respectively. 9
4. === END == For enquiries, please contact: Sabana Real Estate Investment Management Pte. Ltd. Bobby Tay Chiew Sheng Chief Strategy Officer & Head of Investor Relations DID: +65 6580 7768 Email: bobby.tay@sabana.com.sg Cassandra Seet Manager, Investor Relations DID: +65 6580 7857 Email: cassandra.seet@sabana.com.sg Sabana REIT Sabana REIT was listed on Singapore Exchange Securities Trading Limited on 26 November 2010. It was established principally to invest in income-producing real estate used for industrial purposes, as well as real estate-related assets, in line with Shari’ah investment principles. Sabana REIT currently has a diversified portfolio of 21 quality properties in Singapore, in the high-tech industrial, warehouse and logistics, chemical warehouse and logistics, as well as general industrial sectors. Its total assets amount to approximately S$1.0 billion. Sabana REIT is listed in several indices within the SGX S-REIT Index, Morgan Stanley Capital International, Inc (MSCI) Index, the Global Property Research (GPR) index, FTSE index and S&P Dow Jones Indices. Sabana REIT is managed by Sabana Real Estate Investment Management Pte. Ltd., (in its capacity as the Manager of Sabana REIT) in accordance with the terms of the trust deed dated 29 October 2010 (as amended). Sabana REIT is a real estate investment trust constituted on 29 October 2010 under the laws of Singapore. For further information on Sabana REIT, please visit www.sabana-reit.com. Important Notice This announcement is for information only and does not constitute an offer, invitation or solicitation of securities in Singapore or any other jurisdiction nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. The value of units in Sabana REIT (“Units”) and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager, HSBC Institutional Trust Services (Singapore) Limited, as trustee of Sabana REIT, or any of their respective affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request that the Manager redeem or purchase their Units while the Units are listed. It is intended that unitholders of Sabana REIT may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. This announcement is not an offer or sale of any Units in the United States. No Units have been or will be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration except pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act.
5. This announcement is not to be distributed or circulated outside of Singapore . Any failure to comply with this restriction may constitute a violation of United States securities laws or the laws of any other jurisdiction.