SINGAPORE (Apr 16): The manager of Soilbuild Business Space REIT (Soilbuild REIT) has declared distribution per unit (DPU) of 0.883 cents for 1QFY2020 ended March, a 26.3% drop from DPU of 1.198 cents a year ago.
In light of the Covid-19 outbreak, the manager has deferred capital distributions relating to rental incentives and a rental guarantee provided by the vendors.
Had the capital distributions been declared, 1Q DPU would have been 0.950 cents.
“The manager has adopted a more cautious approach by choosing to defer certain capital distributions,” says Roy Teo, CEO of the manager.
The DPU decline was also attributable to an enlarged unit base and higher property operating expenses.
1Q gross revenue rose 3.6% to $23.5 million, from $22.7 million a year ago.
This was led by higher revenue contribution from the newly acquired 25 Grenfell Street and improved occupancy at West Park BizCentral.
However, property operating expenses surged 39.8% to $6.1 million, on the back of $1.0 million higher expenses for 25 Grenfell Street and an allowance for doubtful receivables of $0.6 million.
“We are aware that the pandemic may have affected tenants’ operations and have accordingly recognised an allowance for expected credit losses,” Teo says.
Consequently, net property income (NPI) fell 5.1% to $17.4 million, from $18.3 million a year ago.
Portfolio occupancy rate rose marginally q-o-q to 84.7% in 1QFY2020, from 84.0% in 4QFY2019.
Soilbuild REIT completed more than 238,000 sqft of renewals and new leases for the quarter.
In 1Q, negative rental reversion of 14.0% was recorded for renewals, and positive rental reversion of 3.9% was recorded for new leases.
For the rest of FY2020, 11.3% of the portfolio, or 465,260 sqft of leases, will be expiring.
Weighted average lease expiry by net lettable area and gross rental income stood at 2.8 and 3.4 years respectively.
As at end March, cash and cash equivalents stood at $9.8 million.
Aggregate leverage stood at 38.5% as at March 31, 2020.
“We foresee more challenging times ahead as leasing activities may be impacted by the Covid-19 pandemic. In these trying times, the manager seeks to balance our commitments towards our unitholders while extending our fullest support to our tenants,” Teo says.
Units in Soilbuild REIT closed half a cent lower, or down 1.3%, at 37 cents on Thursday.
