Soilbuild REIT 3rd Quarter Financial Results A Sea of Red

Soilbuild REIT Logo

Following the completion of offering of preferential offering to acquire Bukit Batok Connection (Read more here), Soilbuild REIT announced its 3Q2016 financial results.

The financial figures are in the sea of red. Gross revenue fell 4.7% from 20.1 million to 19.7 million. Net Property Income (NPI) fell 2.9% from 17.8 million to 17.3 million. Distribution per unit (DPU) fell 13.9% from 1.625 cents to 1.399 cents.

3Q2016
(S$’000)
3Q2015
(S$ ‘000)
YoY(%)
Gross Revenue 19,731 20,701 (4.7%)
Net Property Income 17,264 17,777 (2.9%)
Distributable Amount 14,551 15,147 (3.9%)
Distribution Per Unit (“DPU”) (cents) 1.399 1.625 (13.9%)
Annualised DPU (cents) 4.521 4.873 (13.9%)

Although Soilbuild REIT has release a set of negative results, the positive side of it is that Soilbuild REIT has no refinancing requirements till 2018. Soilbuild REIT has recently refinanced its loan. (Read more at Soilbuild Business Space REIT 45 Million Loan)

Soilbuild Debt Maturity Profile 3Q2016

We can significantly sense the weakness in the industrial sector as occupancy continues to fall since 2015. Occupancy for Tuas Connection fell from 93.5% to 86.3%. Occupancy for West Park BizCentral fell from 99.6% to 89.4%.

Soilbuild Occupancy 3Q2016

From the released statistics below, we can see that Soilbuild REIT tries to renew its leases by reducing rent. Average gross rent per square feet as reduced from $1.66 to $1.55. This may have an impact on distribution per unit over upcoming quarters.

Soilbuild Leasing 3Q2016

Conclusion

From the released set of financial results, we can sense the weakness in the industrial sector. Personally, I am not so in favor of rent reduction as it affects the gross revenue and distribution per unit. However, given the current economic downturn, I guess this is the only defensive strategy that Soilbuild REIT can apply for now. At least for FY2018, I do not expect Soilbuild REIT to perform well.

2 thoughts to “Soilbuild REIT 3rd Quarter Financial Results A Sea of Red”

  1. Hi,

    Did you account for the rise in new units due to the preferential offering recently when talking about the huge drop in DPU? It’s a 10 for 1, so the underlying units are increased (roughly) by 10%. it’s not as bad as it looks.

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