Sabana is a Shariah Compliant REIT, which basically means two things.
- They must control the tenants, not to fall under business activities that are not Shariah Compliant. One notable example of this are Banks, as the concept of paying interest is not shariah compliant.
If you noticed, the REITs outperforming now are A-class offices or those that rent to strong and large companies in Singapore, which are mostly banks. This is why Sabana is mostly logistics and warehouse based, and not offices based.
- Shariah Compliant Financing. Sabana opts for financing that are shariah compliant. Since standard interest-based loans are not shariah compliant.
They use special bonds known as a Sukkuk, similar to our collateralized zero coupon bonds. This creates a situation where large repayments occur frequently, as interest compounds throughout the period. Do study in detail the loan maturity and repayment schedule, as that is a major concern.
Basically, look at tenants security & repayment schedules.
Good luck!
Sabana is a Shariah Compliant REIT, which basically means two things.
If you noticed, the REITs outperforming now are A-class offices or those that rent to strong and large companies in Singapore, which are mostly banks. This is why Sabana is mostly logistics and warehouse based, and not offices based.
They use special bonds known as a Sukkuk, similar to our collateralized zero coupon bonds. This creates a situation where large repayments occur frequently, as interest compounds throughout the period. Do study in detail the loan maturity and repayment schedule, as that is a major concern.
Basically, look at tenants security & repayment schedules.
Good luck!