MENU

2 Things That Investors Should Know About Soilbuild Business Space REIT Now – Latest Result & Valuation

Soilbuild Business Space REIT (SGX: SV3U) or SBS REIT, is a REIT that invests primarily in industrial and business parks properties in Singapore. The REIT’s properties include Solaris, West Park BizCentral and Eightrium.

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

Financial performance

Here is a table showing important items from SBS REIT’s financial performance for the first quarter of financial year ending 31 December 2018 (FY18).

Source: SBS REIT Result Presentation

The above is a slide from SBS REIT latest result presentation.

The year-on-year decline in gross revenue and NPI (net property income) was due to lower contribution from 72 Loyang Way, West Park BizCentral, Eightrium and KTL Offshore which was divested in February 2018.

As at 31 March 2018, the retail REIT clocked in a gearing ratio of 40.2%, whilst its occupancy rate fell from 92.7% in last quarter to 87.5% this quarter. Negative rental reversion of 7.2% and 11.9% was recorded for renewal and new leases, respectively, in the quarter.

In all, SBS REIT had a challenging quarter with weakening metrics across the board.

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 SBS REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 40 REITs that are in Singapore’s stock market.

Source: Stock Facts on SGX.com; data as of 20 April 2018

We can see that SBS REIT’s valuation is higher than the market average due to its low distribution yield, offset partially by its high price to book ratio.

We believe we’ve identified a dividend dynamo whose financials are strong enough to qualify its dividend as “safe” – and have profiled this stock in a research report that’s now available to download completely free of charge. Simply click here to claim your copy today!

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.