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10 Quick Things Investors Should Know About Soilbuild Business Space REIT’s Latest Earnings

Last week, Soilbuild Business Space REIT (SGX: SV3U) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Soilbuild Business Space REIT invests primarily in business parks and industrial properties in Singapore. The REIT’s portfolio has properties such as Solaris, West Park BizCentral, Eightrium @ Changi Business Park, and more.

Here are 10 things investors should know about Soilbuild Business Space REIT’s latest results:

1. Gross revenue for the reporting quarter declined by 4.3% year-on-year to S$20.75 million while net property income fell by 6.0% to S$17.75 million.

2. The bottom-line took a bigger hit as the distribution per unit (DPU) sank by 11.9% to 1.383 cents.

3. Based on Soilbuild Business Space REIT’s DPU of 5.712 cents for 2017, and its closing unit price of S$0.705 as of 22 January 2018, the latest distribution translates to a yield of 8.1%

4. As of 31 December 2017, Soilbuild Business Space REIT’s gearing stood at 40.6%, which is close to the regulatory ceiling of 45%.

5. The REIT’s portfolio has a committed occupancy rate of 92.7% at end-2017.

6. The weighted average lease expiry (by gross rental income) stood at 3.0 years as of 31 December 2017. 69.3% of the REIT’s leases are expiring between 2018 and 2021, with the remaining 29.4% expiring from 2022 onwards.

7. Soilbuild Business Space REIT’s overall rental reversion rate for the reporting quarter was a poor negative 15.7%.

8. In December 2017, the manager of Soilbuild Business Space REIT proposed to sell KTL Offshore (a property made up of two adjacent detached factories) for S$55.0 million. The rationale behind the sale is to unlock and release capital back to Soilbuild Business Space REIT to allow it to pursue other growth opportunities.

9. Soilbuild Business Space REIT reported a deficit in total return before distribution of S$67.98 million in 2017’s fourth quarter, mainly due to revaluation losses of S$80.5 million on its investment properties. The properties that saw the biggest fall in value were Loyang Way, West Park BizCentral, Eightrium, NK Ingredients, and Tuas Connection. The decline in the properties’ values was generally due to a soft rental market and lower signing rents.

10. Here’s a succinct summary of the outlook that Soilbuild Business Space REIT has on its own business:


Source: Soilbuild Business Space REIT 2017 fourth quarter earnings presentation

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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.