Someone asked me what do I think of the $90 million 4% certificates due in 2018 being issued by Sabana REIT. Well, it is a good thing. Why?

Sabana REIT has $100 million of debt due this year. So, the money raised will come in handy.

OK, there is another thing good about this and that is the cost of debt which is lower than the 4.5% paid on the $80 million convertible Sukuk due in 2017. Faced with the spectre of higher interest rates now and in the future, the fact that Sabana REIT is able to issue debt with lower cost is a good sign.

In fact, if we look at Sabana REIT’s all-in average borrowing cost, it has been reducing. This was from 4.4% in Dec 2011 to 4.3% in Dec 2012 to 4.1% in Dec 2013…