Soilbuild Reit posts 5.1% rise in distribution per unit for Q3

SINGAPORE - Soilbuild Business Space Reit has posted a distribution per unit of 1.625 cents for the third quarter, up 5.1 per cent from the same period last year.

This was on the back of a 20.8 per cent jump in distribution income to $15.1 million and 22.4 per cent rise in gross revenue to $20.7 million for the three months to Sept 30.

The rise was mostly due to acquisitions completed in the last two years, as reflected in the additional rental revenue from Technics, KTL Offshore, Speedy-Tech and Solaris amounting to $2 million, $900,000, $500,000 and $100,000, respectively.

Net property income climbed by 25.3 per cent to $17.8 million. But this was partially offset by higher net finance costs due to additional borrowings to fund the new acquisitions as well as a higher average all-in interest rate.

Last month, Soilbuild Reit announced the successful refinancing of its $185 million club loan facility. Following this, itss weighted average debt expiry has lengthened to 3.5 years and the all-in cost of debt has reduced to 3.2 per cent a year.

Moreover, its borrowing costs are significantly insulated against interest rate hikes, with 97.9 per cent of the interest rate exposure fixed for the next 2.1 years.

During the quarter, renewals and new leases were signed for over 250,000 sq ft of space, bringing the total for the first nine months to more than 780,000 sq ft.

Occupancy rates remained high at 98.7 per cent.

Despite challenging operating conditions in the industrial space, the progress of leasing activities in the third quarter underscored "the attractiveness of our properties", said the manager for Soilbuild Reit.

Going forward, it will focus on the leases expiring in the fourth quarter and next year.

The industrial property market is exacerbated by a slowdown in the manufacturing sector and huge supply of factory space in the pipeline for the rest of the year.

It continues to face a challenging operating environment as weak macro-economic outlook puts pressure on rentals and occupancy.

Overall leasing activities in the third quarter eased as the number of transactions fell from month to month .

Based on JTC rental index on multiple-user factory, rental has been declining gradually since the third quarter of last year.

"Barring any unforeseen events and subject to renewing and re-leasing the remaining space that expires this year, the manager expects Soilbuild Reit's portfolio to maintain a stable performance in FY2015."

Soilbuild Reit units ended unchanged at 82 cents.