Soilbuild Business Space REIT High Yield but Declining DPU

Soilbuild REIT Logo

For 2 consecutive quarters, the distribution per unit has declined for Soilbuild Business Space REIT. Based on the closing price of $0.72 on 30th June 2017, the annualised distribution yield is 8.2%. I have previously wrote about the investment risks of Soilbuild Business Space REIT here, thus I shall be repeating it again in this post.

I am writing this post just to re-validate my decision to sell Soilbuild Business Space REIT when opportunity arises. The REIT currently makes up 5% of my stock portfolio.

The following are my observations based on its current financials

Declining Distribution Per Unit quarter on quarter (q-o-q)

Distribution Per Unit has been declining. It has proven that we should not solely purchase a REIT based on its high dividend yield.

2nd Quarter 1st Quarter
Distribution Per Unit (“DPU”) (cents) FY2016 1.565 1.557
Distribution Per Unit (“DPU”) (cents) FY2017 1.514 1.539
Variance (6.3%) (1.2%)

Flat Net Asset Value

Flat or stagnant Net Asset Value at $0.72 for the last two quarters. By right after acquisition of Bukit Batok Connection, distribution or property yield should increase but it didn’t.

The Cursed 72 Loyang Way

72 Loyang Way still plagues Soilbuild Business Space REIT. The challenge remains to lease the entire space at 72 Loyang Way due to the subdued marine offshore and oil and gas sector.

Occupancy

Occupancy still at 92.6% which is slightly above the industrial average of 89.4%.

 

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