FINANCIAL REVIEW
REVIEW OF RESULTS
In FY 2014, Sabana REIT delivered a 12.1%
year-on-year increase in gross revenue to
S$100.3 million through a combination of organic
and acquisitive growth. Rental income from the
two most recently acquired properties, 508 Chai
Chee Lane and 10 Changi South Street 2, acquired
on 26 September 2013 and 15 December 2014
respectively, contributed to Sabana REIT’s revenue
stream. Higher rental rates from 151 Lorong Chuan,
which was converted into a multi-tenanted
property on 26 November 2013, also contributed
to revenue growth.
Consistent with revenue growth and the reversion
of five master-leased properties to multi-tenanted
properties, the Trust’s property expenses, including
sign-on incentives in the terms for new leases such
as step-up rental escalation and rent-free periods
as well as finance costs on borrowings to fund new
acquisitions, also rose in tandem. Consequently, for
the financial year under review, NPI and distributable
income fell by 9.2% and 16.4%, to S$72.9 million
and S$51.6 million, respectively.
Total assets for the group increased marginally
by 3.6% to approximately S$1.3 billion as at
31 December 2014 from S$1.2 billion as at
1 January 2014, mainly due to the new property
acquired during the year, partly offset by revaluation
loss of S$7.5 million.
Due to the larger unit base, NAV per Unit declined to
S$1.06 at the end of the financial year as compared
to S$1.09 at the beginning of the financial year.
PRUDENT CAPITAL AND RISK MANAGEMENT
We continue to adopt a prudent strategy to
proactively manage Sabana REIT’s capital
requirements and financial resources with the
objective of maintaining a balanced capital structure
that can enhance its ability to pursue growth
opportunities within a sustainable risk framework.
Our ultimate goal is to achieve a high level of
MOVES
MAKING THE RIGHT
financial and operations excellence so as to provide
consistent and optimal returns to Unitholders.
ENHANCING FINANCIAL FLEXIBILITY
During the financial year under review, through the
Trust’s wholly-owned subsidiary, Sabana Sukuk Pte.
Ltd., we successfully launched the maiden issue
of S$90.0 million Trust Certificates due 19 March
2018 under Sabana REIT’s S$500.0 million Sukuk
Programme established in FY 2013. The successful
issuance was followed on 3 October 2014, by
the second issuance of S$100.0 million Trust
Certificates due 3 April 2019 (collectively known as
the “2014 Trust Certificates”).
The 2014 Trust Certificates enhanced Sabana REIT’s
financial flexibility, enabling us to refinance two term
CMF amounting to S$277.8 million, ahead of their
maturities in November 2014 and August 2015
respectively, while securing new term CMF from
existing lenders with improved terms.
The refinancing exercise strengthened the financial
position and flexibility of Sabana REIT in multiple ways:
• Staggering Sabana REIT’s debt maturity profile
between FY 2016 and FY 2019 with split
maturities of two, three, four and five years, thus
minimising concentration of borrowings due in
any one year to no more than 30.0%, with no
borrowings due in FY 2015;
• Extending the weighted average borrowing
maturity to 3.0 years as at 31 December 2014,
from 2.3 years as at 31 December 2013;
• Removing encumbrances on a total of
eight mortgaged properties valued at
S$305.8 million
1
; and
• Diversifying funding sources and broadening
relationships with local and international banks.
Despite the increase in unsecured and longer tenor
borrowings procured or established in FY 2014, the
Trust maintained its all-in-cost of borrowings at
4.1% per annum while profit coverage ratio
remained healthy at 4.3 times.
1
The security over five of these properties were discharged subsequent to 31 December 2014.
SABANA REIT
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ANNUAL REPORT 2014
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