Soilbuild REIT announces its results for 4Q2015 on 21st January 2016. Distribution Per Unit (DPU) increase 1.8% to 1.614 cents as compared to 1.585 cents a year ago. This brought the total DPU for 2015 to 6.487 cents as compared to 6.193 cents in 2014.
Based on the market closing price of S$0.77 on 31st December 2015, the yield for Soilbuild REIT is 8.42% for year 2015.
| 4Q2015 (S$’000) | 4Q2014 (S$ ‘000) | YoY(%) | |
| Gross Revenue | 20,434 | 17,682 | 15.6 |
| Net Property Income | 17,490 | 14,932 | 17.1 |
| Distributable Amount | 15,091 | 12,892 | 17.1 |
| Distribution Per Unit (“DPU”) (cents) | 1.614 | 1.585 | 1.8 |
| Annualised DPU (cents) | 6.487 | 6.193 | 4.7 |
Lease Expiry
From the below table, we can see that all of the properties in its portfolio have long land lease expiry.
| Property | Land Tenure Expiry |
| Solaris | 31 May 2068 |
| West Park BizCentral | 31 July 2068 |
| Eightrium @ CBP | 15 Feb 2066 |
| Tuas Connection | 30 Sep 2050 |
| NK Ingredients | 30 Sep 2046 |
| COS Printers | 31 Jul 2042 |
| Beng Kuang Marine | 29 Oct 2056 |
| Tellus Marine | 15 Feb 2054 |
| KTL Offshore | 18 Jul 2066 |
| Speedy-Tech | 30 Apr 2050 |
| Technics Offshore | 20 Mar 2038 |
Things to Note
Weakness in Manufacturing Sector
Manufacturing sector is slowing down which affects the industrial property market. This has a downward pressure on industrial rents and occupancy.
Long Term Leases
Long term leases of 5 to 15 years provide stability.
Fixed Annual Rental Escalation of Master Leases
Fixed annual rental escalation of master leases applies to its tenants (Solaris, NK Ingredients, COS Printers, BK Marine, Tellus Marine, KTL Offshore, Speedy-Tech, Technics).
Look carefully at the financial statements. Soilbuild Reit is paying distribution out of increase in fair value of property using their cash reserves for 2014 and 2015. This artificially boost their dpu and gives a misleading picture of the dpu that’s sustainable. Dumped all my soilbuild shares when I realized it today.