Soilbuild Reit Q2 DPU down 14%

SOILBUILD Business Space Reit (Soilbuild Reit) on Monday posted a distribution per unit (DPU) of 1.264 Singapore cents in the second quarter, down 13.8 per cent from the same period a year earlier.

Gross revenue fell 13.1 per cent to S$18.7 million, while net property income fell 13.2 per cent to S$16.2 million.

The decline was due mainly to lower income from 72 Loyang Way, lower occupancy at West Park BizCentral, as well as the absence of income from KTL Offshore, which was divested in February.

The 72 Loyang Way property, located on the waterfront with a jetty, is 29.3 per cent occupied. The Reit manager is required by JTC to lease 70 per cent of the space to an anchor tenant in the oil and gas sector. The space has been vacant since December 2016, when 72 Loyang Way's master lease was terminated.

The Reit manager said it continues to negotiate with potential tenants, and has written in to appeal for JTC's requirement to be relaxed.

Soilbuild Reit's overall portfolio occupancy was 87.6 per cent as at end-June, up from 87.5 per cent at the end of the first quarter.

At West Park BizCentral, non-renewals resulted in a 0.5 percentage point dip in occupancy over the quarter to 81 per cent. However, new take-up at Eightrium at Changi Business Park lifted occupancy by 3.6 percentage points to 88.5 per cent.

Some 170,625 sq ft or 5.9 per cent of the Reit's total net lettable area is due for renewal over the rest of 2018.

In the first half of 2018, a negative rental reversion of 8.3 per cent was recorded for lease renewals, including forward renewals. New leases saw a negative rental reversion of 14.6 per cent. Weighted average lease expiry by gross rental income stands at 2.9 years.

Roy Teo, chief executive of the Reit manager, said: "Rental rates for multiple-user factories are starting to stabilise with the growth in the manufacturing sector and GDP, alongside an easing industrial properties pipeline. We expect to benefit from the conversion of the Solaris master lease to a multi-tenanted building in August."

Solaris, a business park development comprising two towers located within the Fusionopolis cluster in one-north, is fully occupied.

The underlying tenants in Solaris will be assigned back to the Reit manager upon the master lease expiry on Aug 15.

Units in the Reit closed unchanged at S$0.66 on Monday before results were announced after market close.