Lower occupancy hits Soilbuild Reit's Q3

Singapore

SOILBUILD Business Space Reit's third-quarter revenue, earnings and distributions were hit by lower occupancies at its industrial properties.

For the three months ended Sept 30, gross revenue fell 4.7 per cent to S$19.73 million from a year ago while net property income dropped 2.9 per cent to S$17.26 million.

Distributable income was 3.9 per cent lower at S$14.55 million. This, coupled with a 1-for-10 preferential offering of new units last month, contributed to a 13.9 per cent drop in distribution per unit (DPU) to 1.399 Singapore cents for Q3, from 1.625 cents a year ago. This compared with a range of 1.500 to 1.633 cents in the preceding 11 quarters.

"The reduction in revenue from West Park BizCentral and Tuas Connection of S$0.9 million and S$0.3 million respectively was partially offset by additional revenue from Solaris and Bukit Batok Connection amounting to S$0.1 million each. The reduction in revenue was largely attributed to lower occupancy," it said. This also impacted its net property income.

Portfolio occupancy rate was 94.8 per cent as at Sept 30, due mainly to higher occupancy at West Park BizCentral and the acquisition of Bukit Batok Connection. But while up from the preceding Q2's 92 per cent, it was lower than the 98.7 per cent a year ago.

For the nine-month period, DPU slipped 7.2 per cent to 4.521 cents, while gross revenue inched up 0.9 per cent to S$59.44 million and net property income rose 3 per cent to S$51.78 million.

Commenting on the outlook, Roy Teo, CEO of SB Reit Management, said: "For the rest of 2016, 3 per cent of our portfolio net lettable area is due for renewal. Year-to-date, out of the 15.3 per cent of leases expiring in FY2017, we have managed to forward renew 2.3 per cent. The challenge remains to improve occupancy rate in this subdued market while maintaining existing leases."

The distribution will be paid on Nov 14. The books closure date is Oct 20.

The Reit closed trading unchanged at S$0.71 on Wednesday.