Welcome

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.

Tuesday, February 13, 2018

Analysis of Sabana REIT - Depressed Price.

Current Price on 8th Feb 2018 = $0.395
  • Yield = 8.51%  
  • Price-to-book Ratio = 0.718
  • Assets per unit = $0.917
  • Debt per unit = $0.374 (including current liabilities)
  • Gearing = 40.8%
  • Secured NAV = $0.255 (69% of trading price)
Sabana REIT has recently delivered a set of results which I thought was a small improvement from previous quarters. Moreover, the recent sell-down gives us an opportunity to enter. Let's take a look at the statistics.

Despite the recent reports about weak management, their yield is currently at 8.51% which is very high compared to other REITs. Moreover, the price-to-book ratio is at 0.718 which means we are buying at close to 30% discount. Gearing is at 40.8% which is close to 45%.

Discount-to-NAV has featured strongly recently in my analysis because it provides a lot of margin to safety aka it won't drop as much and it will eventually rise. With a 30% discount and all properties based in Singapore, I believe this is a rare opportunity.

Although there are a lot of negativity about this REIT, I believed that it has been priced in. With high yield and trading at a discount to NAV, I believe this is a time to buy. The question is whether we have the ability to hold until it recovers.

3 comments:

  1. I have similar thoughts with regards to this REIT, but my main concern is the declining distributions since 2015. Does not seem reflective on the industry, but possibly due to quality of assets. What are your thoughts on that?

    ReplyDelete
  2. >Despite the recent reports about weak management, their yield is currently at 8.51% which is very high compared to other REITs.

    The question is whether yield is high because of management effort (rising DPU) or due to dropping price.

    ReplyDelete
  3. Hi, do you have any thoughts regarding the management of Sabana and does it have any influence in your belief that this may be a good opportunity to buy? Curious to hear your thoughts.

    Cheers~

    ReplyDelete