Soilbuild Reit Q3 DPU down 9.4% to 1.245 cents

SOILBUILD Business Space Reit on Wednesday announced a distribution per unit of 1.245 Singapore cents for the third quarter ended Sept 30, down 9.4 per cent from Q3 2017's 1.374 Singapore cents.

Income attributable to unitholders fell 8.6 per cent to S$13.2 million from S$14.4 million in the year-ago period.

Gross revenue for the quarter was S$19.8 million, down 3.6 per cent year-on-year from S$20.5 million, while net property income fell 8.8 per cent year-on-year to S$16.2 million from S$17.8 million. Soilbuild Reit attributed this mainly to the divestment of KTL Offshore and lower contribution from West Park BizCentral and Eightrium, partially offset by higher revenue from the conversion of Solaris into a multi-tenanted property on Aug 15.

In its results release, Soilbuild Reit noted that more than 110,000 sq ft of renewals, forward renewals and new leases were completed in the quarter, taking the year-to-date total to 665,000 sq ft of leases signed "despite the soft leasing environment". In the third quarter, occupancy of Eightrium was boosted 0.8 percentage point to 89.3 per cent due to new take-up, but Tuas Connection saw a 2.3 percentage point dip in occupancy due to non-renewals. The portfolio occupancy rate fell marginally quarter-on-quarter from 87.6 per cent in Q2 to 87.2 per cent in Q3.

For the final quarter of 2018, the balance expiring leases by portfolio net lettable area is 1.8 per cent. On a blended basis, rental reversion stands at 2.7 per cent in Q3 with 10 leases signed. Weighted average lease expiry by net lettable area and gross rental income stood at 3.0 and 3.2 years respectively.

Soilbuild Reit highlighted its acquisition on Oct 5 of a centrally-located office in Canberra, 14 Mort Street, and a poultry primary processing plant in Adelaide, Inghams Burton. Both Australian acquisitions are leased to the Australian government and have a weighted average lease expiry of 6.5 years and 16.1 years respectively. The total gross acquisition cost of A$120.96 million (S$118.84 million) was funded by the issuance of perpetual securities, Australian dollar denominated loan and internal resources.

Said Roy Teo, chief executive officer of the Reit's manager: "The DPU-accretive Australia acquisitions and the recent conversion of Solaris to a multi-tenanted building are expected to strengthen and provide further stability to Soilbuild Reit's DPU. In the near term, industrial rents and occupancy rate still face headwinds amid a supply influx in recent years."

In a separate release on Wednesday, Soilbuild Reit announced the receipt of a dividend amounting to about S$3.25 million from Technics Offshore Engineering Pte Ltd, which is in compulsory liquidation and has declared a first and final dividend to its creditors. Soilbuild Reit intends to include these liquidation proceeds in its distributable income for the fourth quarter ending Dec 31.

Soilbuild Reit units closed up one Singapore cent or 1.75 per cent at S$0.58 on Wednesday before the results were released.