Sabana REIT reported a robust set of numbers, declaring a DPU of 2.34c. The counter will go XD on 24 Oct and income distribution is payable on 28 Nov.
Total assets under management: $1.1 bn
Occupancy rate: 99.9%
Average all-in financing cost: 4.3%
Weighted average tenor of debt: 3.5 years.
Interest cover ratio: 5.5x
NAV/unit: $1.03
Sabana REIT's higher income from a slew of acquisitions comes with financing cost increasing significantly as well. Gearing is now higher at 38.3%. However, this does not disturb me much as the net result is still positive for unit holders.
In my opinion, the weakness of Sabana REIT remains a high concentration of leases expiring in 2013. At 47.4%, it has not changed from 3 months ago. My hope is for positive rental reversions which should lead to a higher DPU. I look forward to any growth in income without any significant increase in costs to the REIT.
At the closing price of $1.13 in the last session, the annualised distribution yield is 8.28%. In an environment of very low interest rates, this is still very attractive and a further compression of yield to 7.5% does not seem improbable. That would see unit price at about $1.25.
See presentation slides: here.
Related post:
Sabana REIT: 2Q 2012 DPU 2.27c