Sabana Shari'ah Compliant REIT

UOBKayhian on 27 Aug 2014

FY14F DPU (S$ cent): 7.6
FY15F DPU (S$ cent): 7.8
S$55m acquisition of 10 Changi South Street 2 will be mildly accretive given that it will
be financed through a mix of debt and equity. We factor in further dilution from the
ongoing DRP and remain watchful for the 58% of the portfolio under masterleases which
are due for renewal in the next 15 months.
Maintain SELL with a lower target price of S$0.98 (from S$1.02), based on DDM
(required rate of return: 8.1%, terminal growth: 1.8%). We have lowered our 2014-16
DPU estimates by 1-2% factoring in dilution from the DRP, offset against the mild
accretion from the new acquisition. Downside risks would be nonrenewal of masterleases
or multi-tenanted leases.