Sabana Reit, poised to become Singapore’s first listed Syariah-compliant real estate investment trust (Reit), is likely to be well-received as low deposit rates drive investors to seek higher yielding instruments, analysts say.
Sabana Reit is seeking to raise as much as $696.1 million, according to its prospectus filed with the Monetary Authority of Singapore. It is set to become the world’s largest Syariah-compliant reit when it gets listed this month.
“This listing comes at a time when market is on a rebound and there is a lot of liquidity in the system, both of which are supportive of its price,” said Financial Alliance director Sani Hamid.
He says Sabana Reit will also attract regional investors simply because there are currently only three Syariah-compliant reits in the region, all of which are listed in Malaysia.
Syariah reits differ from conventional reits in the type of assets held by the trust – their portfolio properties must have no connection to activities such as gambling, or products such as alcohol or pork.
Analysts like GCP Global’s executive chairman, Mr Gabriel Yap, said investors’ confidence in industrial reits had been boosted by the recent IPO of Mapletree Industrial Trust (MIT).
MIT has done very well and currently provides a yield of 6.3 per cent to its investors, he added. Sabana Reit’s yield of above 8 per cent is even more attractive.
Freight Links, through its 51-per-cent stake in Sabana Investment Partners, said it would participate in Sabana Reit’s IPO.
The trust’s initial portfolio will hold 15 industrial properties in Singapore estimated at $850 million in asset value.
Source : Today – 12 Nov 2010