Soilbuild Business Space REIT (Soilbuild REIT) delivered a strong set of 1Q14 results last evening. NPI of S$14.2m and distributable income of S$12.6m were 5.3% and 6.1% higher than the respective prospectus forecasts, mainly attributable to higher revenue and lower property and finance expenses. Similarly, DPU of 1.562 S cents was also 6.1% higher than its forecast. We note that the portfolio occupancy has reached 100% following the expansion of space by one tenant and new take up by another tenant during the quarter. In addition, positive rental reversions were achieved.

In the area of capital management, Soilbuild REIT has maintained a stable aggregate leverage of 29.1%, with 100% of its interest rate exposure fixed through interest rate swaps. Looking ahead, Soilbuild REIT believes that it is well placed to deliver on the forecasts set out in its prospectus, barring any unexpected non-renewals. We maintain our BUY rating on Soilbuild REIT but place our S$0.87 fair value under review pending the analyst briefing later in the morning.

Source: OCBC Research - 30 Apr 2014