Soilbuild Business Space REIT Unaudited Financial Statements And Distribution Announcement For The Financial Period From 1 January 2018 To 31 March 2018
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Statement of Total Return and Distribution Statement
- Non-tax deductible items comprise mainly the Manager's management fees payable in Units, rent-free adjustments, the Trustee's fees and amortisation of debt arrangement, structuring and prepayment fees and is partially offset by non-taxable gain on divestment of a property held for sale.
- nm denotes not meaningful.
Review of the Performance on 1Q FY2018 compared to 1Q FY2017
Gross revenue was S$19.4 million in 1Q FY2018, S$2.5 million or 11.5% lower than the gross revenue in 1Q FY2017. The decrease in revenue was largely attributed to lower contribution from 72 Loyang Way, West Park BizCentral, Eightrium and KTL Offshore amounting to S$1.6 million, S$0.4 million, S$0.4 million and S$0.2 million respectively and was partially offset by S$0.1 million higher contribution from Solaris.
Property operating expenses were S$2.5 million in 1Q FY2018, S$0.3 million lower than 1Q FY2017 mainly due to lower property tax expenses incurred for Eightrium, West Park BizCentral and Tuas Connection.
Net property income was 11.6% lower at S$17.0 million in 1Q FY2018 from S$19.2 million in 1Q FY2017 mainly due to the abovementioned reasons.
The increase in interest income of S$68k was largely due to the placement of the property divestment proceeds in a fixed deposit account.
The decrease in finance expenses amounting to S$148k was mainly due to interest savings from the refinancing of TLF 1.
The decrease in Manager's management fees of S$161k was due to lower distributable income which resulted in lower base fee.
Other trust expenses comprised largely professional fees and on-going listing expenses. No credit rating fee was incurred in 1Q FY2018 after Soilbuild REIT's withdrawal of the credit rating.
Total return before distribution was S$32k higher due to the gain on divestment of KTL Offshore amounting to S$1.7 million, lower Manager's management fee, finance expenses and other trust expenses and was partially offset by lower net property income.
Non-tax deductible items were S$1.6 million lower as the gain on divestment of KTL Offshore was non-taxable.
Income available for distribution was S$14.0 million in 1Q FY2018, 10.4% lower than 1Q FY2017 largely due to lower net property income.
The Ministry of Trade and Industry announced that based on advance estimates, the Singapore economy grew by 4.3% year-on-year ("y-o-y") in the first quarter of 2018, higher than the 3.6% growth in the fourth quarter of 2017. On a quarter-on-quarter ("q-o-q") seasonally-adjusted annualised basis, the economy expanded by 1.4%. The manufacturing sector expanded by 10.1% y-o-y in the first quarter of 2018, faster than the 4.8% growth in the previous quarter. All the clusters within the manufacturing sector expanded, with the electronics and precision engineering clusters contributing the most to the sector's growth. On a q-o-q seasonally-adjusted annualised basis, growth in the manufacturing sector came in at 23.3%.1
Singapore's factory activity rose for the 19 th consecutive month with the Purchasing Managers' Index ("PMI") for March 2018 rising to 53.0. PMI for the electronics sector posted a reading at 52.4.2
Rentals of all industrial properties fell by 2.6% and 0.1% in 4Q 2017 y-o-y and quarter-on-quarter respectively. The multi-user factories, single-user factories and warehouse rental indices have receded 2.6%, 2.6% and 5.2% y-o-y respectively, whilst business park rentals expanded 3.5% y-oy. In 4Q 2017, occupancy rate for warehouses, business parks and single-user factory space rose 1.6%, 0.7% and 0.1% q-o-q respectively while occupancy of multiple-user factory fell by 0.1%.3
- Source: Ministry of Trade and Industry's press release dated 13 April 2018
- Source: Singapore Institute of Purchasing & Materials Management publication.
- Source: JTC quarterly rental index of industrial space.