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Soilbuild Business Space REIT Has A Yield Of 9.1% Now: 3 Things Investors Should Know

Soilbuild Business Space REIT (SGX: SV3U) is a real estate investment trust that focuses on properties used primarily for business space and industrial purposes. In Singapore’s REIT universe, Soilbuild Business Space REIT has one of the highest distribution yields at the moment at 9.1%.

The REIT currently has 12 properties in its portfolio and they have an aggregate gross floor area of 3.92 million square feet and a value of S$1.29 billion (as of 31 December 2015).

Here are three things about Soilbuild Business Space REIT that may interest investors:

1. A mixed-bag of results in 2016 so far

soilbuild-business-space-reit-distributable-income-table Source: Soilbuild Business Space REIT 2016 third-quarter earnings presentation

The table above is a quick summary of the REIT’s performance in terms of growing its distributions in the first nine months of 2016. We can see that the REIT’s distributable income is up by 2.6% to S$48.9 million.

Yet, that did not translate into a higher payout to unit-holders. Due to an even higher increase of 11.5% in the number of units in issue, Soilbuild Business Space REIT’s distribution per unit had slipped by 7.1%.

2. Occupancy rate

The occupancy rate for a REIT is an important metric to look at since it gauges the strength of the market demand for the REIT’s properties.

In Soilbuild Business Space REIT’s latest earnings, it reported an overall portfolio occupancy level of 94.8% as of 30 September 2016.  While the occupancy of 94.8% represents a sequential increase from the 92.0% seen in the second-quarter of 2016, it is lower compared to a year ago. In fact, the REIT’s occupancy levels have been declining over the past few quarters as shown below (focus on the pink line):

soilbuild-business-space-reit-portfolio-occupancy-chart
Source: Soilbuild Business Space REIT 2016 third-quarter earnings presentation

All that being said, Soilbuild Business Space REIT’s occupancy is still higher than some of its peers. For instance, Viva Industrial Trust’s (SGX: T8B) occupancy is only at 88.6% as of 30 September 2016.

3. A diversified customer base

You can see a breakdown of Soilbuild Business Space REIT’s monthly gross rental income by trade sectors in the chart below:

soilbuild-business-space-reit-trade-sector-chart
Source: Soilbuild Business Space REIT 2016 third-quarter earnings presentation

Turns out, the REIT’s tenants come from a wide variety of trade sectors and no sector accounts for more than 12.2% of the REIT’s rental income.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.