Soilbuild REIT 3Q18 net property income falls after KTL Offshore divestment

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Soilbuild Business Space REIT reported third quarter net property income fell 8.8 percent on-year to S$16.22 million after the divestment of KTL Offshore and on lower contributions from West Park BizCentral and Eightrium.

That was partially offset by higher revenue from converting Solaris into a multi-tenanted property in mid-August, it said in a filing to SGX after the market close on Wednesday.

The divestment of KTL Offshore was completed in February, leaving the portfolio with 11 properties in Singapore, it said. The REIT completed the acquisitions of two Australian properties earlier this month, it said.

Gross revenue fell 3.6 percent on-year in the quarter to S$19.8 million, it said.

The distribution per unit (DPU) for the quarter was 1.245 Singapore cents, down 9.4 percent on-year from 1.374 Singapore cents a year earlier, it said.

Portfolio occupancy fell to 87.2 percent in the third quarter from 87.6 percent in the second quarter, Soilbuild REIT’s manager said.

For the nine-month period, net property income fell 11.3 percent on-year to S$49.46 million, while gross revenue was down 9.5 percent on-year at S$57.98 million, it said. The DPU was 3.833 Singapore cents for the nine-month period, down 11.5 percent on-year from 4.329 Singapore cents in the year-earlier period, it said.

In its outlook, the REIT manager noted that rentals of all industrial properties in Singapore fell in the second quarter, down 1.4 percent on-year and 0.1 percent on-quarter.

“In the near term, industrial rents and occupancy rate still face headwinds amid a supply influx in recent years,” Roy Teo, CEO of the REIT manager, said in the statement.

But he added, “We are pleased with our maiden foray into the Australia real estate market. The DPU accretive Australia acquisitions and the recent conversion of Solaris to a multi-tenanted building are expected to strengthen and provide further stability to Soilbuild REIT’s DPU.”

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