SINGAPORE (July 16): The manager of Soilbuild Business Space REIT (Soilbuild REIT) has declared a distribution per unit (DPU) of 0.745 cents for 2Q20 ended June, a 36.8% drop from the DPU of 1.179 cents a year ago.
The manager has retained $1.6 million of capital distribution. Had the amount been declared, the DPU for 2Q20 would have been 0.875 cents.
Gross revenue for the quarter rose 2.9% to $23.0 million from the $22.4 million a year ago. The increase was mainly due to higher contributions from the newly acquired 25 Grenfell Street in Adelaide, Australia.
Gross revenue fell 2.1% q-o-q on the back of lower contributions from 2 Pioneer Sector 1 and 72 Loyang Way, which was divested in April.
However, property operating expenses surged 54% y-o-y to $13.0 million on an allowance for doubtful receivables of $2.1 million. Property expenses for 25 Grenfell Street and 2 Pioneer Sector rose $2.1 million and $0.2 million respectively.
Consequently, net property income (NPI) fell 11.8% y-o-y owing to an allowance for doubt receivables of $1.5 million and higher property expenses for 25 Grenfell Street. The manager says it has provided for trade receivables in view of potential credit notes as rental reliefs for tenants.
Portfolio occupancy rate rose 0.9 percentage points y-o-y, and 4.8 percentage points q-o-q to 89.5% in 2Q20.
Excluding 2 Pioneer Sector 1 for both 1Q20 and 2Q20, 2Q20 occupancy fell 0.5 percentage points from 90% in 1Q20 based on a like-for-like comparison.
Soilbuild REIT completed more than 145,000 sqft of renewals and new leases for the quarter. Year-to-date, it has completed over 383,000 sq ft of renewals and new leases.
In 2Q, positive rental reversion of 3.1% was recorded for renewals, and 23.3% for new leases.
For the rest of FY20, 7.0% of the portfolio or 267,725 sqft of leases, will be expiring.
Weighted average lease expiry (WALE) by net lettable area and gross rental income stood at 3.0 and 3.4 years respectively.
As at end June, cash and cash equivalents stood at $13.7 million.
The REIT announced that it has obtained unitholders’ approval to award a design and build contract to an interested person, Soil-Build, at an extraordinary general meeting (EGM) held on June 25. The development cost is said to be estimated at $82.1 million and $91.4 million based on plot ratios of 1.0 and 1.32 respectively.
“While we had tenants in essential services who were able to operate during the circuit breaker, we are pleased to see our tenants’ operations pick up in the first two phases of the country’s re-opening,” says Roy Teo, CEO of the manager.
“A decision was made to withhold capital distributions relating to unremitted Australia-sourced income and to increase the provision for rental relief to $2.1 million. We have taken a prudent approach in our financial reporting to enable us to fully support our tenants. We seek the understanding of our unitholders as we navigate our portfolio through turbulent times together,” he adds.
Units in Soilbuild REIT closed flat at 42 cents on Thursday, prior to the announcement.
