Sabana Reit

Sabana Reit: 4Q12 results in line. Distributable income of $17.4m, DPU at 2.18 cts, bringing the full year DPU to 9.28 cts. FY12 revenues were at $81.8m (6.3% yoy, 18.7% above UOBK forecast) while Net Property Income (NPI) touched $76.9m (53% yoy, 16.3% above forecast) mainly due to mainly due to contribution from the Acquisition Properties. Mgt noted that the impact on Sabana REIT from the recent industrial property measures is expected to be minimal it holds its properties on a long term basis. The measures will potentially weed out speculators and moderate industrial property prices, particularly strata-title units. Portfolio occupancy remains 100% for the 20 properties under master-lease agreements and 98.4% for the multi-tenanted property at 9 Tai Seng Drive. The total asset value now exceeds $1.1b. UOBK has a Buy recommendation with TP $1.30, based on the DDM model (required rate of return: 7.5%, terminal growth: 2.0%). The REIT is trading at a yield of 8% (vs 5.7% for the sector).