Soilbuild REIT's Eightrium in Changi Business Park (Photo: REITsWeek)

OCBC Investment Research has maintained a ‘Hold’ rating on Soilbuild REIT in the wake of the latter’s 1Q 2017 results.

Soilbuild REIT reported a gross revenue of SGD22 million (USD15.7 million) on 12 April for its 1Q 2017, a 9.2% increase year-on-year, but DPU for the period fell by 4.4% to 1.489 Singapore cents.

However OCBC noted that despite this dip, there were positive signs that bode well for the REIT, such as the rise in occupancy from from 89.6% to 91.8%.

The firm also understands that Soilbuild REIT has obtained approval from JTC to lease out up to 30% of 72 Loyang Way’s gross floor area to non-oil and gas related tenants.

“While the leasing environment has improved, rental reversions are likely to remain soft”, said OCBC in an investment report on 13 April.

“There are also uncertainties as to how quickly Soilbuild REIT will be able to find an anchor tenant for its 72 Loyang Way asset”, it added in reference to the property that saw a tenancy default in mid-2016.

Soilbuild REIT warned in late 2016 that tenancy challenges over 72 Loyang Way would impact its DPU.

OCBC has maintained a fair value estimate of SGD0.64 on the REIT, and is projecting a distribution yield of 8.4% for FY 2017.

Units of Soilbuild REIT are currently listed on the Singapore Exchange at SGD0.685.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.