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Soilbuild Reit's DPU falls 11% to 1.324 Singapore cents

SOILBUILD Business Space Reit (Soilbuild Reit) posted a drop in distribution per unit (DPU) of 11 per cent to 1.324 Singapore cents, from 1.489 Singapore cents for its first quarter ended March 31.

Gross revenue dropped 11.5 per cent to S$19.4 million from the previous year. Net property income fell 11.6 per cent to S$17.0 million from the previous year.

Q1 income available for distribution dropped 10.4 per cent to S$14.0 million from the year-ago period.

The showing was mainly on the back of lower revenue from 72 Loyang, divestment of KTL Offshore and lower occupancies at West Park BizCentral and Eightrium.

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It also recorded capital gain of S$1.7 million upon divestment of KTL Offshore to SB (Pioneer) Investment Pte Ltd, a wholly-owned subsidiary of Soilbuild Reit's sponsor for S$55.0 million in February 2018.

Roy Teo, CEO of the manager, said: "The industrial property market remains soft with competing supply negatively impacting our occupancy and rental rates. We are making headway with the restructuring of Soilbuild Reit's portfolio and strengthening its tenants mix."

Occupancy rate of its portfolio fell from 92.7 per cent in Q4 FY2017 to 87.5 per cent.

The manager successfully completed more than 302,000 sq ft of renewals, forward renewals and new leases in the first quarter despite the soft leasing environment, but non-renewals of some expiring leases at Westpark BizCentral and Eightrium resulted in property occupancy dipping to 81.5 per cent and 84.9 per cent respectively.

Those non-renewals arose from tenants closing their businesses and downsizing, and tenants who shifted into facilities they had acquired.

Soilbuild Reit also saw negative rental reversion of 7.2 per cent and 11.9 per cent renewal and new leases in Q1 FY2018 respectively.

Weighted average lease expiry by net lettable area and gross rental income stood at 2.9 and 3 years respectively.

Soilbuild Reit's properties include Solaris in one-north, Eightrium @ Changi Business Park, Tuas Connection, West Park BizCentral and Bukit Batok Connection.

Its units ended unchanged at S$0.66 on Monday, before results were announced.