Sabana REIT's 1H22 Results - DBS Research 2022-07-21: A Prelude To Singapore’s Resilient Industrial Sector

• Sabana REIT (SGX:M1GU)'s 1H22 revenues increased 14.7% y-o-y to S$44.9m mainly due to increased contributions from hi-tech industrial (NTP, 8 Commonwealth Lane, 23 Serangoon North Ave5 ) and warehouses (51 Penjuru Road).
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• We expect Sabana REIT's 2H22 earnings to be marginally higher due to an increased contribution from NTarget price and higher portfolio occupancy rates.
• A 10-year master lease has been signed at 30/32 Tuas Ave 8. The property has been fully leased to a tenant from the healthcare sector, with rental escalations in place throughout the 10-year lease.
• Portfolio occupancy improved ~3ppt q-o-q to 88.2%, the highest occupancy rate in over 4.5 years.
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• As compared to 31 Dec 2021, a S$5.5m increase was reported in Sabana REIT's portfolio valuation, to S$871.7m. Portfolio valuations are expected to increase further once the AEI of 1 Tuas Ave 4 commences and it has committed occupancies
• Sabana REIT's gearing improved to 33.4%, as borrowings were gradually paid down with cash from operations and proceeds from DRP
• 75.3% of loans are currently hedged to fixed rates, ensuring stability in financing costs amid rising interest rates. No loans will be due in the next two years. Every 20bps increase in interest rates will lead to a ~0.5% reduction in DPU.

Our thoughts

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Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-07-21 SGinvestors.io

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