Welcome to my investment blog where I share with you my analysis of REITs in Singapore.

I hope that my investment philosophy will bring me a steady stream of income apart from my job. I am aiming for at least $3,000 per month which can sustain the current expenses of myself and my family.

Do enjoy reading my blog and post any comments that you have. I welcome them because it is a time to learn from each other.

When I am looking at investing in REIT, here are some of the guidelines that I am looking at. Feel free to comment on it. I am willing to listen to ideas.

-> at least 8% yield.
-> Price that is lower than its NAV.
-> Low gearing (if possible)
-> High secured NAV.

Current Dividend income is $3,800/month.

Monday, April 11, 2016

Analysis of Sabana REIT

Current Price on 5th Apr 2015 = $0.64
  • Yield = 9.38%  
  • Price-to-book Ratio = 0.72
  • Assets per unit = $1.586
  • Debt per unit = $0.696 (including current liabilities)
  • Gearing = 43.9%
  • Secured NAV = $0.382 (60% of trading price)
Sabana REIT has been struggling with occupancy which is dropping by quite a lot with their current rate at 87.7%. I am expecting it to drop further when there are other rent expiry. Thus, I am expecting distribution yield to fall further by 10% - 15%.

Yield is currently at 9.38% but if it drops further, it may reach 8% only. One saving grace is that their price-to-NAV is much lower at 0.72 which means we are able to buy it at 28% discount. This is due to the lower yield that is coming in. Gearing is at 43.9% and their secured NAV is at 60% of their trading price.

I think if they are able to retain their current tenants, it will be a success in itself as they would be able to maintain distribution at current levels. Therefore if it really happens, it is actually a good time to enter this REIT with organic potential for further growth (although it will come only in two year's time when economy recovers)

One more thing is about consolidation of REITs sector which was previously mentioned. Sabana REIT is a small REIT which is susceptible for take over by other REITs or private funds. Thus, with such deep discounts to NAV, I won't be surprised that someone will take notice and purchase these properties at a discount and wait for it to rise.

I have a very small portfolio on this and will consider entering only after I look at other counters.

1 comment:

  1. Their NAV is falling ... And they are selling some of their properties to pare down their debt. This would mean even lower NAV and lower distribution.