SINGAPORE (Apr 16): SB REIT Management announced that Soilbuild Business Space REIT’s DPU for 1Q18 has dropped 11.1% to 1.324 cents compared to 1.489 cents in 1Q17.
Gross revenue for the quarter dropped 11.5% to $19.4 million from $22.0 million a year ago. This was largely attributed to lower contribution from 72 Loyang Way, West Park BizCentral, Eightrium and KTL Offshorek, but partially offset by higher contribution from Solaris.
Property operating expenses dropped 11.3% to $2.46 million, compared to $2.77 million last year, mainly due to lower property tax expenses incurred for Eightrium, West Park BizCentral and Tuas Connection.
Hence, net property income for 1Q18 came in at $17.0 million, 11.6% lower than $19.2 million in 1Q17.
During the quarter, the REIT recorded a $1.74 million gain on divestment of a property held for sale, which was absent in 1Q17.
Finance expenses declined by 3.8% to $3.78 million from $3.93 million a year ago, mainly due to interest savings from the refinancing of TLF 1.
Manager’s management fees also dropped by 10.3% to $1.40 million compared to $1.56 million last year, due to lower distributable income which resulted in lower base fee.
This brought the income available for distribution to $14.0 million, 10.4% lower than $15.6 million in the previous year.
The REIT’s portfolio occupancy rate fell to 87.5% in 1Q18, from 92.7% in 4Q17.
The REIT’s manager successfully completed more than 302,000 sq ft of renewals, forward renewals and new leases in the first quarter despite the soft leasing environment.
Non-renewals of some expiring leases at Westpark BizCentral and Eightrium resulted in property occupancy dipping to 81.5% and 84.9% respectively. The non-renewals were mainly due to tenants’ business closures and downsizing and tenants shifting into facilities they have acquired.
Roy Teo, CEO of the manager says, “The industrial property market remains soft with competing supply negatively impacting our occupancy and rental rates. We are making headway with the restructuring of Soilbuild REIT’s portfolio and strengthening its tenants mix.”
“We have also received 6 months of cash security deposit from NK Ingredients Pte. Ltd. as they continue operating in our premises. We are now in a better position to benefit from a potential recovery of the industrial property market,” adds Teo.
Units in Soilbuild Business Space REIT closed at 66 cents on Monday.