Sabana Industrial REIT 3Q 2025 & YTD 2025 Financial Analysis: Record Results and Strategic Progress

Sabana Industrial REIT has reported its results for the third quarter and first nine months of 2025, highlighting a period of robust financial performance, proactive asset management, and a significant internalization process. Below, we break down the key financial metrics, management commentary, and outlook for investors.

Chairman and CEO’s Statement

“As the outgoing Manager of the REIT, we are deeply encouraged by how our current team has built the best foundation that we could to set the REIT strongly ahead for sustained growth. Despite the odds, we have achieved stellar performance for the first nine months of this year. Barring unforeseen circumstances, we expect the REIT to deliver a double-digit percentage growth in income available for distribution per unit for FY 2025.

Together with our team, we have been steadfast in our strategy and execution – extracting the most from our existing portfolio to grow organically through asset enhancement initiatives and asset rejuvenations – all these while keeping a strict discipline on our capital management.

We have been fervent in our pursuits to invest responsibly on the environmental front. Our sustainability initiatives including the generation of solar energy at our properties will future-proof the REIT for the journey ahead and for many years to come. The REIT is poised to become one of Singapore’s first carbon neutral industrial REITs by 2040.

As Manager, we serve the best interests of our Unitholders. We are heartened to note that our REIT is the best performing S-REIT in terms of total return of 34.2% for the first nine months of this year.

We are deeply grateful to our staff for their dedication and commitment. They have persevered and soldiered on in giving their best, united in vision to deliver on our mission.”

The tone of the statement is highly positive and forward-looking, underpinned by a sense of accomplishment and confidence in the REIT’s future trajectory.

Key Financial Metrics and Performance Table

*The REIT’s policy is to distribute at least 90% of distributable income on a half-yearly basis, but explicit DPU for the quarter is not stated as paid/declared in the report.

Historical Performance Trends

• Revenue and Earnings Growth: Since 2018, Sabana Industrial REIT has demonstrated a consistent upward trend in both gross revenue and net property income, with 3Q 2025 marking the strongest quarterly performance since 1Q 2018.
• Distribution Per Unit: Income available for distribution per unit reached a record 1.01 cents for two consecutive quarters in 2025, reflecting strong execution and prudent cost management.
• Rental Reversions: The REIT has achieved 19 consecutive quarters of positive rental reversion, underscoring robust leasing activity and asset management.
• Asset Valuation: The crown jewel, New Tech Park, reached a 12-year high occupancy of 94.7% and saw its valuation rise to \$364.2 million as of June 2025, up from \$308.6 million prior to the NTP+ Mall development.

Exceptional Items and One-off Expenses

• Internalisation Costs: Cumulative internalisation-related expenses up to 30 September 2025 totaled \$12.80 million. About 10% of distributable income was retained to support these costs, with the possibility of further retention.
• Auditors’ Emphasis of Matter: The auditors highlighted a material uncertainty regarding the REIT’s ability to secure refinancing of a \$75 million loan maturing in March 2026, due to the internalisation process potentially triggering a review event. However, the review report is not qualified, and management believes funding needs can be met due to moderate gearing and a fully unencumbered portfolio.

Operational Highlights and Portfolio Quality

• Portfolio Occupancy: Improved to 87.0% as of September 2025, led by New Tech Park’s 94.7%.
• Lease Management: 24 new and renewed leases were concluded in 3Q 2025, with a tenant retention rate of 56.2% and a proactive renewal strategy addressing all 2025 expiries and 63.9% of 2026 expiries.
• Rental Reversion: Achieved a strong 11.3% in 3Q 2025, bringing YTD rental reversion to 12.2%.
• Balance Sheet: As of September 2025, net asset value per unit stands at S\$0.49, with aggregate leverage at 38%, an interest coverage ratio of 3.4x, and 72.6% of borrowings on fixed rates.

Environmental, Social, and Governance (ESG) Progress

• Sustainability: 8.1% of total electricity consumption across properties is now from solar energy. The REIT targets carbon neutrality by 2040 and maintains 100% sustainability-linked financing facilities.
• ESG Recognition: Achieved a GRESB Green Star and improved governance rankings, including a higher score in the Singapore Governance and Transparency Index.

Corporate Actions and Significant Events

• Internalisation Process: Ongoing transition to an internal management model, with significant associated costs and some uncertainty around loan refinancing as a result.
• No Announced Divestments, Share Buybacks, or New Equity Placements during this period.

Macroeconomic and Sector Outlook

• Economic Backdrop: Singapore’s GDP grew 2.9% in 3Q 2025. Industrial rents are expected to grow 1–3% year-on-year, with continued strength in logistics and high-tech sectors.
• REIT-Specific Outlook: Management expects a double-digit percentage increase in income available for distribution per unit for FY 2025, barring unforeseen circumstances.

Conclusion and Investor Recommendations

Summary: Sabana Industrial REIT delivered record results in 3Q and YTD 2025, with strong revenue, earnings, and rental reversions. The outlook remains favourable, supported by high occupancy, proactive lease management, and robust portfolio fundamentals. Key risks include execution of the internalisation process and successful refinancing of upcoming debt maturities.

• If you are currently holding the stock: The positive operational and financial momentum, combined with management’s commitment to higher distributions, supports a continued hold. However, monitor updates regarding the internalisation process and loan refinancing closely, as these represent the main risks.
• If you are not currently holding the stock: The REIT offers a strong track record of growth, rising distributions, and sector-leading total returns. Entry may be considered, but only with an understanding of the current uncertainties surrounding management transition and refinancing. Wait for further clarity on these fronts if risk tolerance is low.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consider their own financial situation and risk tolerance before making investment decisions.

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