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What Investors Should Know About Soilbuild Business Space REIT’s Latest Earnings and Valuation

Soilbuild Business Space REIT (SGX: SV3U) invests primarily in business parks and industrial properties in Singapore. The REIT’s portfolio has properties such as SolarisWest Park BizCentralEightrium @ Changi Business Park, and more.

There are two things about the REIT that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

Here’s a table showing important items from Soilbuild Business Space REIT’s income statement for the fourth quarter of 2017:


Source: Soilbuild Business Space REIT 2017 fourth quarter earnings press release

We can see that Soilbuild Business Space REIT did not have a good quarter, as its gross revenue, net property income, and distribution per unit (DPU) all came in lower compared to a year ago. The REIT attributed its weaker performance to lower contributions from its 72 Loyang Way property, and higher expenses.

Looking ahead, the REIT sees the supply of industrial properties increasing by 5% by end-2018, before easing from 2019 onward. Colliers also expects industrial property rents “to moderate in 2018 and overall rents to recover 1-3% p.a. in 2019-2021F as supply eases.”

In a bit of positive news, Soilbuild Business Space REIT has a committed portfolio occupancy rate of 92.7% as of 31 December 2017, which is higher than the industrial-average occupancy of 88.6%.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Soilbuild Business Space REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.


Source: SGX Stock Facts

We can see that Soilbuild Business Space REIT has a slightly higher PB ratio than the market, but its distribution yield is significantly better.

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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.