Soilbuild Business Space(Dividend yield 7.9%) announced their third quarter results.
The Distributable Income dropped by 3.9% and overall DPU dropped by 13.9%. We have to be aware that there was a preferential offering, which is dilutive to existing shareholders and enlarged the share base.
This preferential offering was to fund the purchase of a short land lease Bukit Batok connection.
The Gross Revenue was down by 4.7% versus last year same time. However, we expected the impact to be greater.
Recall that Technics Oil and Gas defaulted on their rent, and Technics Oil and Gas contribute 8% to revenue. It is likely that the company is drawing down the rental deposit.
There are only 3% more properties in 2016 that is up for renewal. We are already seeing Soilbuild renewing 2.3% of the properties expiring in 2017.
From the above slide, those forward renewal in 2017 have a negative 6.6% rental revision. The new leases look low as well.
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Thursday 13th of October 2016
Just wanted to add that the contribution from Bukit Batok Connection hasn't fully kicked in yet. Once it's in, it's about 10% of revenue, thus shouldn't have an issue cancelling out the loss of revenue from Technics.
Saturday 15th of October 2016
hi FFE, thanks for pointing out my mistake. If you see the opportunity, you might make out that they may be able to find a tenant for the premises at Technics. even though its challenging in this climate. My acquaintance have a problem selling a nearby factory.