LETTER TO UNITHOLDERS
Notwithstanding the weaker DPU, Sabana REIT
continued to deliver competitive distribution yield
for our Unitholders. Based on the Trust’s closing
unit price of S$0.94 as at 31 December 2014, Sabana
REIT’s distribution yield for FY 2014 was approximately
7.8%. Unitholders who have invested in Sabana REIT
since its listing on 26 November 2010 would have
enjoyed annualised distribution yield of approximately
9.3%, or a total return of close to 23.8%
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STRATEGIC PORTFOLIO GROWTH
In FY 2014, we continued to look for quality assets
that fit within Sabana REIT’s growth strategy. We kept
a measured pace in selecting potential properties and
we are pleased to inform that we were able to grow
the Trust’s portfolio with a strategic acquisition.
On 15 December 2014, we completed the
acquisition of 10 Changi South Street 2, Sabana
REIT’s 23rd acquisition and the first property in our
portfolio at Changi South Industrial Estate. The yield-
accretive property, completed at a total acquisition
cost of S$54.9 million, is a good fit for our portfolio.
10 Changi South Street 2 is located in a highly
sought-after area for logistics businesses. It is
close to Changi Airport and Singapore Expo, and
is readily accessible by two major expressways.
More importantly, the property is fully leased back
to the vendor, Adviva Distribution Pte. Ltd., for the
next ten years. This arrangement provides Sabana
REIT with a new source of long-term income stream
immediately post-acquisition.
The acquisition of 10 Changi South Street 2
expanded the gross floor area (“GFA”) of Sabana
REIT’s portfolio by 4.2% or 189,609 square feet
(“sq ft”), from approximately 4.5 million sq ft in
FY 2013. Additionally, the total value of our assets
following the acquisition also approached
S$1.3 billion, from approximately S$1.2 billion
as at 31 December 2013.
PROACTIVE PORTFOLIO MANAGEMENT
During the year, we proactively implemented
measures to mitigate the transitory impact of the first
wave of the lease expiry/renewal cycle on the Trust’s
performance. We deployed more manpower and
increased our marketing and leasing activities. We also
diligently engaged our master tenants and underlying
sub-tenants so as to manage vacancy downtime and
worked ahead to find new tenants in the event that
the leases were not renewed upon expiry.
We are pleased to share that in FY 2014, we
successfully achieved close to 90 transactions
(directly or in collaboration with the master tenants)
for renewing existing and contracting new leases.
These included the successful signing of two master
leases (3A Joo Koon Circle and 6 Woodlands Loop)
which expired in 4Q 2014. In addition, we carried out
a smooth handover from the master tenant of 2 Toh
Tuck Link when its lease expired in November 2014.
As at 31 December 2014, Sabana REIT had a
more diversified portfolio with a total of seven
multi-tenanted and 16 master-tenanted properties.
Overall portfolio occupancy level of the Trust was
kept largely steady at 90.7%.
STRENGTHEN FINANCIAL BASE BY
DIVERSIFYING FUNDING SOURCES
We continued to demonstrate creativity and
know-how in strengthening Sabana REIT’s
capital structure. During the year, we successfully
completed two issuances of Fixed Periodic
Distribution Certificates (“Trust Certificates”), under
Sabana REIT’s S$500.0 million Multicurrency Islamic
Trust Certificates Issuance Programme (“Sukuk
Programme”) with proceeds totalling S$190.0
million. We also completed the refinancing of two term
Commodity Murabaha Facilities (“CMF”) amounting to
S$277.8 million, ahead of their maturities in November
2014 and August 2015, through the proceeds of the
Trust Certificates issued in 2014 and new term CMF
from the existing lenders.
These refinancing exercises have strengthened
the financial position and improved the financial
flexibility of Sabana REIT in numerous ways.
10 Changi South Street 2
is located in a highly
sought-after area for logistics businesses. It is close
to Changi Airport and Singapore Expo, and is readily
accessible by two major expressways.
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For more information on unit performance, please refer to page 21.
SABANA REIT
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ANNUAL REPORT 2014
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