Soilbuild Business Space REIT - OCBC Investment 2016-06-06: Seeking a new tenant at 72 Loyang Way property

Soilbuild Business Space REIT - OCBC Investment 2016-06-06: Seeking a new tenant at 72 Loyang Way property SOILBUILD BUSINESS SPACE REIT SV3U.SI 

Soilbuild REIT: Seeking a new tenant at 72 Loyang Way property 

  • Soilbuild Business Space REIT (Soilbuild REIT) announced that since its tenant Technics Offshore Engineering Pte Ltd (TOE) at its 72 Loyang Way property has filed for judicial management order at the High Court of Singapore, this constitutes an event of default to its lease agreement. Hence, Soilbuild REIT has commenced the search for a new tenant for the property. 
  • The near-term impact is mitigated as Soilbuild REIT has received S$11.8m in cash in relation to its claim from a security deposit obtained when it entered into the lease with TOE in May 2015. This is equivalent to ~18 months of rent. 
  • As of 2 Jun 2016, the total rental, late payment interests and other outstanding amounts payable under the lease agreement amounting to S$2.9m (~four months’ rent) remain outstanding. Hence management said that it does not expect any impact on its DPU and NTA per unit unless it is unable to find a new tenant willing and able to pay at least similar rent which TOE was paying, prior to the full utilisation of the security deposit. 
  • As Soilbuild REIT has ~14 months to source for a replacement tenant before any material impact on its distributions will set in, we keep our BUY rating and S$0.82 fair value estimate on the stock.





Wong Teck Ching Andy CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-06-06
OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 0.82 Same 0.82


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