- Yield = 8.23%
- Price-to-book Ratio = 0.816
- Assets per unit = $1.76
- Debt per unit = $0.699 (including current liabilities)
- Gearing = 39.7%
Sabana REIT caught my eye when they deliver their results. Not very stellar but a lot of important information.
Firstly, it is their expiry of master lease of most of their remaining master-leased properties. It contributes about half of their income. Thus, I will look at their worse-case scenario. If all converted to multi-tenanted and their occupancy drops to 75%, I am predicting a 15% drop in their yield which will translate to about 7.00% yield. However, I don't think it will go that low. Maybe a 10% drop will be more realistic (translate to a yield of 7.41%) Valuation should also drop but I am not very sure how much. I am assuming that it remains the same.
With a current yield of 8.23% (predict to drop to 7.41%) and a price-to-book ratio of 0.816, the yield is quite comparable other industrial REITs. Moreover, they actually have the potential to be better than the scenario which I have painted. And there is room for leasing and every additional lease is yield-accretive. (Although they have not progress much)
It looks like this is going to be the next troubled REIT, which is not exactly a bad thing as the trading price will be depressed as well, presenting an opportunity (a bargain). If the price goes down further, I may make my move to purchase.
Firstly, it is their expiry of master lease of most of their remaining master-leased properties. It contributes about half of their income. Thus, I will look at their worse-case scenario. If all converted to multi-tenanted and their occupancy drops to 75%, I am predicting a 15% drop in their yield which will translate to about 7.00% yield. However, I don't think it will go that low. Maybe a 10% drop will be more realistic (translate to a yield of 7.41%) Valuation should also drop but I am not very sure how much. I am assuming that it remains the same.
With a current yield of 8.23% (predict to drop to 7.41%) and a price-to-book ratio of 0.816, the yield is quite comparable other industrial REITs. Moreover, they actually have the potential to be better than the scenario which I have painted. And there is room for leasing and every additional lease is yield-accretive. (Although they have not progress much)
It looks like this is going to be the next troubled REIT, which is not exactly a bad thing as the trading price will be depressed as well, presenting an opportunity (a bargain). If the price goes down further, I may make my move to purchase.
wonderful article is this. quality thesis
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