Sabana REIT's purchase of Changi South property from Vibrant draws scrutiny

SINGAPORE (Feb 28): Sabana Shari’ah Compliant Industrial Real Estate Investment Trust is proposing to acquire a four-storey light industrial building at 47 Changi South Ave 2 from its sponsor, Vibrant Group, at a per-square-foot price that is well above recent transactions in the area. That raises questions about the independent valuations provided by the three big-name property consultancies in support of the transaction.

Sabana REIT said in December that it would acquire three properties costing $77 million. None of the those properties are likely to be immediately yield-accretive, even though two were purchased with income support packages. The property being acquired from Vibrant has been valued at $23 million by Savills and Knight Frank, which were engaged by Sabana REIT. A third property valuer, Colliers, which was engaged by Vibrant, also arrived at a valuation of $23 million.

The property received its Temporary Occupation Permit in 1998 and has a remaining lease of 10+30 years from JTC. Vibrant, which acquired the property in 2010 for $10.9 million, will lease back 74% of the gross floor area (GFA) for the property for 10 years. In those 10 years, Vibrant will pay a total rent of $17.1 million to Sabana REIT. The company has indicated that it would make a gain of $9.06 million from the sale of the asset to Sabana REIT. The company expects to receive JTC permission for transfer of ownership by April 10.

---

Related Stories

• Sabana REIT announces update on $2.1 mil claim against tenant Kleio One-Solution
• Sabana REIT’s trustee has identified candidates for directors and senior management of new internal manager
• Sabana REIT obtains TOP for 1 Tuas Ave 4

---