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Sabana Industrial REIT reports portfolio occupancy of 83.0% in 1QFY2024 after property repossession

Bryan Wu
·2-min read

The REIT repossessed the Penjuru Lane properties on March 8 after a court ruling in its favour against its former tenant.

Sabana Industrial REIT M1GU has reported a portfolio occupancy of 83.0% for the 1QFY2024 ended March 31, down from 91.2% in 4QFY2023.

The reduced portfolio occupancy is due to its reposession of the premises at 33 and 35 Penjuru Lane on March 8 after a court ruling in favour of the REIT against former tenant Kleio.

Excluding the previously master-leased Penjuru Lane properties, the REIT’s porfolio occupancy would have remained stable at 91.3%.

Meanwhile, the REIT’s weighted average lease expiry (WALE) stood at 2.9 years as at March 31, lower than the 3.0 years in the previous quarter.

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In the 1QFY2023, the REIT signed new leases totalling 1,915 sq ft.

The REIT also renewed leases totalling some 137,511 sq ft with a positive rental reversion of 23.7% as at end-March, a significant improvement over the positive rental revision of 6.2% as at end-December 2023.

As at March 31, the REIT’s aggregate leverage stood at 35.6% with an interest coverage ratio (ICR) of 3.4 times. The proportion of its total borrowings on fixed rates stood at 51.8%. The REIT’s debt headroom stood at $134.9 million as at end-March.

“In view of the uncertainties arising from internalisation process of the Aug 7, 2023 and March 8 EGMs, it has been a very difficult 1QFY2024 for Sabana Industrial REIT. These challenges have been compounded by the unexpected turn of 33 & 35 Penjuru Lane repossession on March 8 where portfolio occupancy slid to 83.0%,” says Donald Han, CEO of the REIT manager.

“That being said, with the recent court decision in the REIT’s favour, including the dismissal of the counterclaims by the ex-tenant of 33 and 35 Penjuru Lane against the REIT, the REIT is proceeding with its claims for outstanding rent and other payments due under the lease. Concurrently, re-marketing is progressing well and we are anticipating offers from third party logistic firms,” he adds.

Han notes that the REIT’s property at 1 Tuas Avenue 4, which has been named Sabana@1TA4, is advancing towards a June temporary occupation permit (TOP) date. Sabana@1TA4 is expected to be a net positive energy building and has achieved the Building and Construction Authority (BCA) green mark super low energy certificate, the first such award for the REIT.

On the REIT’s progress in sustainability, the CEO also says that it is well-positioned to capitalise on alternative solar energy given potential energy price volatility in view of instability in the Middle East.

Units in Sabana REIT closed unchanged at 36.5 cents on April 15.

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