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.

Friday, December 23, 2016

Rights Issue of Sabana REIT

Current Price on 22th December 2016 = $0.44
  • Yield = 10.91%  
  • Price-to-book Ratio = 0.498
  • Assets per unit = $1.528
  • Debt per unit = $0.644 (including current liabilities)
  • Gearing = 42.1%
Sabana REIT has announced a series of property acquisition and also a rights issue at a deep discount of $0.258 which is extremely unusual. Moreover, the pro forma data of distribution and NAV is not clearly shown which sort of shows that they know that the share price will drop when they announce these buys. And I don't think their biggest shareholder is going to participate in this rights exercise which is very very unusual. I have made an estimate of what will happen after today's last day of cum-rights trading.

Ex-Rights Price = $0.37
  • Yield = 9.12%  
  • Price-to-book Ratio = 0.532
  • Assets per unit = $1.149
  • Debt per unit = $0.453 (including current liabilities)
  • Gearing = 39.4%

I remember this scenario happens as well during 2008 where credit dried up due to US crisis and a number of REITs needed to raise cash at a deep discount. We haven't really seen one yet this year or period of time until this week. Looking at the price, I guess the price just continue to drop until a normalised rate of 9+% yield which is their current price. Thus, for those who hold on to shares (including myself) suffered a paper loss of about 12% which is quite hurting. Nevertheless, the drop in price has already happened and we have to look forward from here.

With this statistics, the REIT may just as well look slightly stronger due to lower gearing. Price-to-book ratio is still at a deep discount of 47% which is still quite good. Yield is at 9.12% which still looks great although it can be greater.

To be frank, I increased my shareholdings from 41,000 to 101,000 just before their announcement so I am staring blankly at a paper loss of about $7,000 which is huge for me. Nevertheless, I am still taking a long term view of high yield REITs trading at deep discounts to NAV as my strategy and waiting for a turnaround. (I have the holding power anyway). It may take two years to recover but I am willing to wait.


  1. The problem here is the management is very weak, not looking into the minor shareholders' benefit.

  2. Thanks for the update. The NAV looks fantastic but is the NAV already marked to market value? Going forward the economic environment for Singapore looks extremely weak and Singapore's open economy concept is not helping the reits market any time soon not even in the next 12 months.