SOILBUILD BUSINESS SPACE REIT
SV3U.SI
Soilbuild Business Space REIT - Challenging times in a subdued market
- S$19.73mn gross revenue in line with our expectations of S$19.77mn.
- 1.399 cents DPU exceed our expectations of 1.312 cents by 6.6%.
- 151,145 sq ft of renewals and new leases signed.
- Portfolio occupancy edged up to 94.8%.
Portfolio occupancy edges up to 94.8%, from 92.0% in the previous quarter
- This was due to higher occupancy at West Park BizCentral and inclusion of Bukit Batok Connection into the portfolio.
- Portfolio occupancy would have been 94.2% instead, without Bukit Batok Connection.
Successful leasing, but with rental reversion of -6.6% on forward renewals
- The Manager had signed 151,145 sq ft from seven new leases and two forward renewals.
- The seven new leases signed were all from West Park BizCentral. Among them, four were for 2-3 years and three were short-term of four months. For the forward renewals, one was from Tuas Connection and the other from Eightrium.
- Negative rental reversion has worsened, as it was -5.7% in 2QFY16, and -0.6% in 1QFY16. Better occupancy of 90.8% (from 82.7%) at West Park BizCentral was the lone bright spot.
Limited exposure to interest rate fluctuation
- Weighted average debt maturity is 2.2 years, with no refinancing requirements till 2018.
- 88.5% of borrowings are at fixed rate. Aggregate leverage of 36.0% allows headroom of S$88mn.
Update on Technics Offshore Property
- The Manager is in negotiations with three potential tenants – two of whom are considering long-term leases of 5-10 years, while the third is short-term of one year. Occupancy at the property will be c.80%, if all three tenants sign a lease.
- As of our previous report (11 October), we had assumed an occupancy of 60% from 3QFY17 onwards, coinciding with the depletion of the 18-months security deposit. Our assumption is subject to change, as greater clarity emerges.
Maintain "Neutral" rating with slightly higher of target price of S$0.72 (previous: S$0.69)
- We under-estimated this quarter's distribution per unit (DPU) by 6% and have made adjustments to our forecasts. Unitholders can expect higher quarter-on-quarter (qoq) DPU in 4QFY16, due to contribution from Bukit Batok Connection, but lower year-on-year (yoy) DPU due to the larger Unitholder base following the Preferential Offering.
Richard Leow CFTe
Phillip Securities
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http://www.poems.com.sg/
2016-10-13
Phillip Securities
SGX Stock
Analyst Report
0.72
Up
0.690
