Sabana REIT: 2Q 2013 2.4c DPU.
Sabana REIT has declared a DPU of 2.4c and will go XD on 23 July. Unit holders will be paid on 29 August.
The numbers are nothing out of the ordinary:
NAV/share: $1.06
Gearing: 37.1%
Interest cover ratio: 5.1x
Occupancy: 100%
Some people wonder why Sabana REIT is trading with such a high distribution yield. It is nearly 8%.
Well, there are many possible reasons but one reason is probably because 5 of its master leases are expiring in November this year and this is something I have blogged about since the second half of last year.
In the latest report, the management revealed that 1 of the master leases will be renewed while the other 4 are still undergoing negotiations. It has been revealed that in the event these 4 master leases are not renewed, the REIT will see a 7.3% vacancy rate. This would impact income available for distribution negatively even if temporarily.
As asking rents of industrial properties have risen over the last 3 years, I expect Sabana REIT to renew these leases with positive rental reversions if they should be successful in securing renewals. Failure to secure renewals would mean some temporary loss of income but it could be a good thing as the asking rents could be scaled higher compared to that of a master lease.
The numbers are nothing out of the ordinary:
NAV/share: $1.06
Gearing: 37.1%
Interest cover ratio: 5.1x
Occupancy: 100%
Some people wonder why Sabana REIT is trading with such a high distribution yield. It is nearly 8%.
Well, there are many possible reasons but one reason is probably because 5 of its master leases are expiring in November this year and this is something I have blogged about since the second half of last year.
In the latest report, the management revealed that 1 of the master leases will be renewed while the other 4 are still undergoing negotiations. It has been revealed that in the event these 4 master leases are not renewed, the REIT will see a 7.3% vacancy rate. This would impact income available for distribution negatively even if temporarily.
As asking rents of industrial properties have risen over the last 3 years, I expect Sabana REIT to renew these leases with positive rental reversions if they should be successful in securing renewals. Failure to secure renewals would mean some temporary loss of income but it could be a good thing as the asking rents could be scaled higher compared to that of a master lease.
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