Sabana Shari’ah Compliant REIT

New kid on the block – Priced at $1.05/unit, shares in Sabana Shari’ah Compliant REIT, the world’s largest shari’ah-compliant REIT, will start trading at 2pm today. The IPO is almost 2.5x subscribed, signalling a healthy level of interest. The IPO price implies a P/B ratio of 1.06x, in line with the valuation of Mapletree Industrial Trust (MIT) during its recent IPO. Backed by strong cornerstone investors and substantial shareholders, we expect Sabana REIT will also enjoy a strong debut like that of MIT.

Sabana REIT’s policy is to distribute 100% of its income for FY11 and FY12, and thereafter distribute at least 90% of its income. Its forecast distribution yields of 8.22% for FY11 and 8.25% for FY12 are within the 6.8-9.3% range offered by the industrial/logistics REITs listed on the Singapore Exchange. With an initial portfolio of 15 Singapore industrial and warehouse and logistics properties valued at $851m, Sabana REIT is a close comparable to Cache Logistics Trust in terms of asset size and type.