Soilbuild Reit sells Loyang property for S$33.1m

SOILBUILD Business Space Reit (Soilbuild Reit) on Tuesday said it has completed the divestment of its property at 72 Loyang Way and the mechanical and electrical equipment within, for about S$33.1 million.

The purchaser is an unrelated third party, Kim Hock Enterprise.

In its results announcement in January, Soilbuild Reit noted that the Loyang property contributed to lower revenue for the fourth quarter. This was due to the absence of non-recurring liquidation proceeds from Technics Offshore Engineering of about S$3.3 million and weighed on gross revenue, which fell 11.5 per cent to S$22.8 million.

As a result, the Reit's fourth-quarter distribution per unit fell 36.3 per cent to 0.925 Singapore cent, from 1.451 cents a year ago. For the three months ended Dec 31, 2019, distributable income also slipped 24.1 per cent to S$11.7 million.

With a total net lettable area of 171,293 square feet, the property at 72 Loyang Way is an integrated facility comprising two blocks of three-storey and four-storey ancillary office, two high ceiling single-storey production facilities, a blasting and spray painting chamber, a working dormitory and a jetty with 142 metres of sea frontage.

It is situated on a number of JTC leasehold estate land titles that collectively expire on March 20, 2038, with a remaining tenure of 19 years as at March 21, 2019, when the divestment was first announced.

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The property was independently valued by Colliers International Consultancy & Valuation at S$34 million on Dec 31, 2018, and the initial consideration for the deal was about S$34.1 million.

The sale consideration was subsequently revised to S$33.1 million, after there was a further extension for obtaining JTC's final approval for the proposed divestment.

Soilbuild Reit previously noted that net proceeds from the divestment may be used to fund new acquisitions, repay debt, finance any capital expenditure and asset enhancement works, capital distribution, and/or to finance general corporate and working capital requirements.

According to the Reit manager, the divestment will unlock and release capital back to Soilbuild Reit. It also cited "prolonged weakness in the marine offshore and oil & gas sector" and that it was challenging to find a suitable replacement tenant as some reasons for the divestment.

As at 9.19am on Wednesday, units in Soilbuild Reit were trading at S$0.38, up S$0.01 or 2.7 per cent.