Soilbuild Business Space REIT (Soilbuild REIT) reported its 3Q14 results which met our expectations and exceeded its IPO prospectus forecast slightly. Revenue and DPU of S$16.9m and 1.546 S cents came in 0.9% and 2.0% higher than its forecast, respectively. For 9M14, Soilbuild REIT’s gross revenue of S$50.5m was 1.9% above its forecast and met 74.5% of our FY14 projection. DPU of 4.608 S cents was 3.1% ahead of its forecast and constituted 74.9% of our full-year estimate.

Portfolio occupancy was firm at 99.9% as at 30 Sep 2014. In a separate announcement, Soilbuild REIT also announced the acquisition of a property at 61 & 71 Tuas Bay Drive with a total cost of transaction of S$55.7m. This would be funded solely by debt and the deal is expected to be completed in 4Q14. Soilbuild REIT’s aggregate leverage will increase from 32.0% to 35.6% following the acquisition. We maintain our BUY rating and S$0.88 fair value on Soilbuild REIT.

Source: OCBC Research - 23 Oct 2014