|New Tech Park before the Asset Enhancement Exercise by Sabana REIT|
1."Refresh Strategy" under new CEO is actually working well
Donald Han joined Sabana REIT as the new CEO in January 2018. He is a real estate veteran with over 30 years of experiences including working as the Managing Director Asia Pacific of Cushman & Wakefield and also the Managing Director of Chesterton Singapore. Donald had introduced and also implemented the "Refresh Strategy" which involves (i) disposing underperforming assets and matured assets, (ii) undertaking asset enhancement initiatives and (iii) acquisition of yield accretive assets locally or overseas. He is thus instrumental to the New Tech Park revamp- please see point 2 below.
2. New Tech Park under "Refresh Strategy" beautifully executed as alluded to pt 1 now has a new retail F&B podium and also foodcourt at level 2 to be operationally ready by Q2 of 2021.
New Tech Park has already secured many new tenants for its retail F&B podium as well as got an operator for its 2nd level foodcourt. Good quality tenants include Collins, Wine Connection, Dutch Colony Coffee and Signature (a full range supermarket specializing in international produce).
I did a rough projection of the expect upsides to Sabana REIT unit holders for post execution of New Tech Park. This is going to increase the distribution per unit by 16.7% for FY2021 and 22.0% for FY2022 relative to FY2020 (reason being FY2021 only has around 8mths positive impact from opening of the new retail mall and foodcourt). If the market price is at S$0.40 per unit, the distribution yield is expected to be 7.17%. for FY2021 and expected to go up to 7.51% for FY2022.
|Projected distribution yield after AEI at New Tech Park|
|Extracted from Commercial Guru for benchmarking|
I estimated the rental per shop is at S$15,840 using a listing for New Tech Park new retail shop at Commercial Guru (S$19,800 per mth) and then applying a discount of 20% on S$19,800 per mth to be conservative in the projection. 25 retail units available per the news articles will thus mean S$396K additional contribution per month and S$3.168Mil for remaining 8 mths in FY2021.