Sabana REITSabana REITOctober 2013

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Contents

1. Company Profile

2. Industrial Analysis

3. Valuation

4. Debt and Risk

Company Profile

�World's first REIT under Shari'ah Compliant

�Currently 100% Occupancy Rate

�Looking at acquisition (508 Chai Chee Lane)

�S&P BBB- rating

�2Q13 yield 8.3% y-o-y, DPU 0.024

Source: Company

Industrial

Source: Company

Industrial

Source: Company

Industrial

Source: Company

Industrial

Source: Company

Lease Expiry Profile

Source: Company

� Pressure is still on for the four master lease expiring in Nov 2013, downward pressure on DPU if not renewed

Valuation

Year 2012A 2013E 2014E 2015E 2016E

Net Property Income ($’000)

76,937 87,324 92,882 94,740 96,635

Net financing costs ($’000)

-17,057 -17,897 -18,949 -20,212 -21,474

Operating Fees ($’000)

-9,199 -8,392 -8,804 -8,941 -9,081

Income available for distribution ($’000)

54,041 61,198 63,238 63,761 63,804

DPU (SGD Cents) 8.44 9.96 9.20 9.22 9.22

Fair Value $1.18

Forecasted Dividend Yield 8.07%

Cost of Equity 8.6%

Terminal Growth 1.0%

Peer Comparison

Company NameLast Price @ 11/10/13

Market Cap (S$ Mil)

Annualized Div. Yield

Gearing (%)

Price to Book Ratio

AIMS AMP CAPITAL INDUSTRIAL 1.50 789.9 6.67 27.3 0.86

ASCENDAS REAL ESTATE INV TRT 2.30 5522.0 6.17 27.0 1.17

CACHE LOGISTICS TRUST 1.19 918.7 7.54 24.4 1.21CAMBRIDGE INDUSTRIAL

TRUST 0.68 838.1 7.29 34.6 1.01MAPLETREE INDUSTRIAL

TRUST 1.36 2256.3 7.17 33.3 1.23MAPLETREE LOGISTICS

TRUST 1.08 2622.2 6.70 32.4 1.17SOILBUILD BUSINESS SPACE

REIT 0.74 594.6 7.89 30.1 0.93

SABANA SHARIAH COMP INDUSTRIAL REIT 1.11 765.6 8.15 35.6 1.02

Sector Average 1788.4 7.20 30.6 1.07

*Source: Data From Bloomberg and HSBC, Soilbuild dividend yield estimated

Sensitivity Analysis

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%

% Change in Fair Value

All-In Financing Cost (%)

Sensitivity Analysis: Financing Cost

Sensitivity Analysis

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%

% Change in Fair Value

Singapore Government 10-Year Bond Yields

Sensitivity Analysis: Risk-Free Rate

Debt Profile

Debt Debt Amount Maturities

Commodity Murabaha Facilities A, B

252.6 mil (refinanced by E,F )

2013

Commodity Murabaha Facilities C

100 mil 2014

Commodity Murabaha Facilities D

12 mil (Fully repaid)

2013

Commodity Murabaha Facilities E,F

252.6 mil 2015, 2017

Convertible Sukuk 80 mil @ 4.5% per annum

24 Sep 2017

Source: Company

Debt Analysis

Source: Company

As at 30 Sep 2013

Borrowings S$ 455.3 Mil

Outstanding term loans S$ 352.8 Mil

Outstanding Revolving Credit Facilities S$ 30.0 Mil

Convertible Sukuk due 2017 S$ 72.5 Mil

Aggregate Leverage 37.5%

Average all in financial Cost 4.0%

Weighted average debt tenor 2.1 years

Interest cover 5.0X

� No pressure on falling behind interest obligation but the short tenor of the debt tenor will increase financial cost given rising interest rate environment

Risk Analysis

�DPU Pressure� Changing from Master tenant to Mulit-tenant profile as well as a

flattish industrial rental outlook (increase supply) will put pressure on stability of its occupancy and distributable income

�High Debt Leverage � At around 35% and management is still indicative of further

acquisition means that there is still pressure for further dilutive rights issue

�Rising Financial Cost� Rising interest rate will affect cost of capital

Shari’ah compliant

Source: Company

Appendix: Valuation

Table 1: 2013 Q4 Revenue Estimate

Base line (Q2 Revenue) S$ 21.6 mn

Lease renewal loss at 93% occupancy2 (0.1)

Additional revenue from new property3 1.2

Net 22.7

2 Four properties subject to lease renewal. Assume 93% occupancy, effectively impacting Q4 performance.3 Chai Chee property revenue at S$1.925/ psf

Revenue 2013 Q3 – S$21.6 mn (flat with Q2)2013 Q4 – S$22.7 mn (see table 1 on the right)FY2014 – S$92.9 mn (see table 2 on the right)FY2015 – S$94.7 mn (revenue growth of 2%)FY2016 – S$96.6 mn (revenue growth of 2%)

Operating expenses

Assume constant % of Revenue

Interest rate

Assume +0.3% year on year

DPU/ Dividend Yield %1

FY2013 – 8.96 cents/ 8.1%FY2014 – 9.20 cents/ 8.4%FY2015 – 9.22 cents/ 8.4%FY2016 – 9.17 cents/ 8.4%

1 At price of S$1.075

Table 2: 2014 Q1-4 Revenue Estimate

Base line (Q2 Revenue) S$ 21.6 mn

Lease renewal loss at 93% occupancy2 (0.2)

Additional revenue from new property3 1.9

Net for each Quarter 23.2

Net for FY 92.9