OUTLOOK cashplus-stock ESR-REIT merger deal that would have valued Sabana REIT at 54.5 Singapore cents per unit. As at the end of January, Sabana’ s listed units were trading at S $ 0.38 a piece.
While the Shari’ ah compliant REIT’ s assets are predominantly logistics and industrial properties— a category that has seen resilient performance during the pandemic— Han said the road ahead is not without headwinds. The REIT plans to focus on its Refreshed Strategy, first introduced in 2017, which involves asset enhancements, the disposal of poor performing assets and the potential acquisition of yieldaccretive properties.
However, there remain strong headwinds for the industrial property market. It is still a tenants’ market as businesses continue to explore how to optimise space usage and operating costs in the new normal. With construction restarting on many projects delayed last year due to the Circuit-Breaker and ample supply of space coming on stream over the near term, the segment also continues to be in an oversupply situation.
Here’ s what Han told ReitAsiaPacific:“ Covid-19 and its devastating effects will continue to impact all segments of the real estate market in Singapore in the year ahead. The Ministry of Trade and Industry has estimated Singapore’ s GDP growth to be at a positive 4-6 % this year, compared to a negative 5.8 % in 2020, indicating light at the end of the tunnel. Still, recovery will be uneven and companies will need to continue to adapt to a still fast-evolving and challenging situation. According to a recent Singapore Business Federation survey, seven in 10 of the firms hurt by Covid-19 say it will take at least a year to recover.
Industrial segment resilient but headwinds remain
Relative to other segments of the real estate market such as hospitality, retail, and office, the industrial segment- including manufacturing, logistics, and warehousing facilities- has been relatively more resilient. Even during the Circuit- Breaker period last year, industrial properties performed comparatively better as many of their tenants were essential service providers.
Ensuring sustainable value with Refreshed Strategy
As landlords, the key is to remain competitive. For Sabana REIT, we will continue to deliver our Refreshed Strategy to ensure sustainable value for Unitholders. This includes progressing on our asset enhancement initiative at our flagship New Tech Park; our new NTP + mall has seen strong interest from tenants and will help us to grow and diversify revenue contribution when work on it completes in 1Q 2021. We are also undertaking rejuvenation at select assets such as at 23 Serangoon North Avenue 5, to better meet the demands of current and prospective tenants and to ensure our properties stay ahead of the competition.
Commonwealth Lane Facade Source: Sabana REIT
At the same time, we are recalibrating our portfolio and tenant mix to be more resilient. Key economic drivers are the electronic and biomedical industries. We are being selective and have onboarded multinational corporations(“ MNCs”) from these sectors who are in expansionary mode. Already, we have secured new strategic life science and healthcare tenants at 3A Joo Koon Crescent and recently onboarded a major US electronic firm as anchor tenant at 23 Serangoon North Avenue 5.”
9