Soilbuild Reit on track to meet FY14 DPU forecast

Singapore

SOILBUILD Business Space Reit says it is well-placed to deliver its forecast distribution per unit (DPU) for the full financial year of 2014, having reported a DPU of 1.546 Singapore cents for the third quarter ended Sept 30 that beat its own forecast by 2 per cent.

The Q3 DPU came on the back of net property income of S$14.2 million, which exceeded its forecast by 1.7 per cent as the Reit received income from newly acquired Tellus Marine and incurred lower property expenses due to lower maintenance costs for multi-tenanted properties.

The gross revenue reported for the quarter was S$16.9 million, exceeding the forecast by 0.9 per cent.

Given limited supply of business parks and hi-specification industrial space, various real estate consultants are projecting rents for such space to hold steady in the final quarter of 2014, the Reit manager said. But conventional industrial space could see rents easing due to greater competition from premises with newer and better specifications.

"As Soilbuild Reit has a majority of its portfolio focused in the business parks and hi-specifications sector, the management believes that it is well-placed to deliver on its forecast distribution for the 2014 financial year," said the Reit manager.

It had projected a DPU of 5.97 Singapore cents for fiscal 2014, which would translate to 7.7 per cent distribution yield based on the IPO price of 78 cents.

Soilbuild Reit enjoyed a portfolio occupancy rate of 99.9 per cent as at Sept 30, with only 8.4 per cent of the fiscal 2014 lease expiries outstanding.

Its current portfolio comprise eight properties located in key technology, media and back office hubs and logistics clusters in Singapore with total net leasable area of 3.05 million sq ft and a weighted average lease expiry of 3.8 years. The Reit has an average leverage of 30.3 per cent and a weighted average debt maturity of two years as at Sept 30.

In a separate announcement on Tuesday, Soilbuild Reit said that it is buying two adjacent detached purpose-built factories located along Tuas Bay Drive for S$55 million.

The property, which sits on a 60-year lease site, has a remaining tenure of 51.7 years with three sub-tenants from trade sectors including offshore & marine and logistics. It was independently valued at S$56 million by Colliers International on Oct 7.

Soilbuild Reit said the initial net property income from the asset provides an additional growth driver and further reduces its reliance on any single asset or lessee.

Together with an earlier proposed acquisition of a light industrial property along Kian Teck Lane in August, these acquisitions will bring Soilbuild Reit's total portfolio value beyond S$1 billion.

Soilbuild Reit's distribution payment date for the third quarter will be Nov 20, and the books closure date is Oct 30. The units were unchanged after Tuesday's trading at 79.5 Singapore cents.