SABANA Industrial Real Estate Investment Trust (Sabana Reit) posted a distribution per unit (DPU) of S$0.0134 for the first half of its fiscal year ended Jun 30, 2024, down 16.8 per cent from S$0.0161 in the corresponding year-ago period, its manager announced on Tuesday (Jul 23).
Gross revenue for H1 slipped 0.2 per cent on year to S$55.2 million from S$55.3 million, with the overall portfolio occupancy sliding to 78.8 per cent, from 93.9 per cent a year ago.
This was mainly due to the repossessions of 33 and 35 Penjuru Lane in March, and 30 and 32 Tuas Avenue 8 in June, with the master tenant having been placed under creditors’ voluntary liquidation, the manager said.
Both properties are being re-marketed. After Jun 30, 2024, about 42 per cent of the total lettable space at Penjuru Lane has been leased out, and a one-month booking fee has been received for approximately 27 per cent of total lettable area.
Site viewings have also been conducted for prospective tenants for the Tuas Avenue locations.
The manager added that the court has ruled in favour of Sabana Reit in the case of the Penjuru Lane repossession, in respect of its claim of an outstanding sum and losses suffered of approximately S$4 million, from Kleio One-Solution.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
But Kleio filed a notice of appeal, which is currently before the High Court and awaiting a decision.
Net property income was stable at S$27.2 million for the half year. The total amount available for distribution came in at S$16.6 million, 6.6 per cent lower than the preceding year’s S$17.8 million. This was a result of higher finance costs due to increased borrowings and higher borrowing costs, the manager said.
Donald Han, chief executive officer of the manager, noted the challenging macro environment and uncertainties arising from the Reit’s internalisation process.
Sabana Reit has been locked in a tussle between unitholders and managers regarding its management model. In the first six months of 2024, the Reit incurred S$3.5 million in expenses – arising from the implementation of resolutions passed at an extraordinary general meeting on Aug 7, 2023 – to effect the internalisation.
But Han added: “The Reit’s proactive leasing strategy, asset rejuvenation and focus on tenant management and higher rentals have led to an improvement in portfolio valuation to S$914.5 million.”
This marks a 3.3 per cent increase year on year.
The manager noted 42 new and renewed leases, and a tenant retention rate of 90.5 per cent for lease renewals in H1 2024. The Reit achieved a positive rental reversion of 16.8 per cent for the six-month period, though this was lower than the year-ago period’s 20.1 per cent.
Sabana@1TA4, Sabana Reit’s second major asset enhancement initiative, received its Temporary Occupation Permit on Jul 9. Lease documentation is underway with a prospective tenant for the annex block, comprising about 64 per cent of its total lettable area.
Units of Sabana Reit closed S$0.005 or 1.5 per cent higher at S$0.34 on Tuesday.
