I would like to summarize my thoughts on my investment journey with Industrial reit, using Sabana and Ascendas as examples. Here are my main points.

1) The pitfalls of 100% occupancy with Master Leases

It is 100% occupied because 1 master Tenant took charge of the whole place, it could be 100% occupied, 50% occupied.  Why does it matter? Because 2 things affect renewal, rental rates and occupancy rates.

When I studied the 4 of Sabana Master leases that are expiring in 2013, a couple of the leases have no rental escalation clause, and during the few years, industrial rents have been on a up trend, so I thought, the negotiation is taking long because Sabana is negotiating hard for a positive rental reversion. It is only when the master tenants got converted, that I got 2 shocks.

a) 3 of the leases has occupancy of less than 70%, and …