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Financials

Soilbuild Business Space REIT Financial Statements And Distribution Announcement For The Third Quarter And Financial Period From 1 January To 30 September 2018

Financials Archive

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Statement of Total Return and Distribution Statement

Balance Sheet

Footnotes:

  1. Non-tax deductible items comprise mainly the Manager's management fees payable in Units, 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.


  2. nm denotes not meaningful.

Balance Sheet

Balance Sheet

Review of the Performance on YTD FY2018 compared to YTD FY2017

Non-tax deductible items comprise mainly the Manager's management fees payable in Units, 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. Gross revenue was S$58.0 million in YTD FY2018, S$6.1 million or 9.5% lower than the gross revenue in YTD FY2017. The decrease in revenue was largely attributed to lower contribution from 72 Loyang Way, West Park BizCentral and Eightrium amounting to S$2.6 million, S$2.1 million and S$1.1 million respectively, the divestment of KTL Offshore on 28 February 2018 resulting in S$2.1 million lower revenue and was partially offset by S$1.9 million higher revenue from Solaris. Solaris was converted into a multi-tenanted property on 15 August 2018.

Property operating expenses were S$8.5 million in YTD FY2018, S$0.2 million higher than YTD FY2017 mainly due to higher property expenses incurred for Solaris and was partially offset by lower property expenses for Eightrium and 72 Loyang Way.

Net property income was 11.3% lower at S$49.5 million in YTD FY2018 from S$55.7 million in YTD FY2017 mainly due to the abovementioned reasons.

Gain on divestment of a property held for sale relates to the divestment of KTL Offshore.

The decrease in finance expenses amounting to S$0.7 million was mainly attributed to lower gross borrowings following the redemption of notes due in May 2018.

The decrease in Manager's management fees of S$0.5 million was due to lower distributable income which resulted in lower base fee.

Other trust expenses comprised largely professional fees and on-going listing expenses. The reduction in other trust expenses of S$0.4 million was due to the absence of credit rating fee in FY2018 after Soilbuild REIT's withdrawal of the credit rating, as well as lower professional fees.

Total return before distribution was S$3.0 million lower due to S$6.3 million lower net property income and was partially offset by the gain on divestment of KTL Offshore amounting to S$1.7 million, lower finance expenses, manager's management fees and other trust expenses.

Non-tax deductible items were S$1.9 million lower largely due to non-taxable gain on divestment of KTL Offshore.

Income available for distribution to Unitholders was S$40.5 million in YTD FY2018, 10.7% lower than YTD FY2017 largely due to lower net property income.

Review of the Performance on 3Q FY2018 compared to 3Q FY2017

Gross revenue was S$19.8 million in 3Q FY2018, S$0.7 million or 3.6% lower than the gross revenue in 3Q FY2017. The decrease in revenue was largely attributed to the divestment of KTL Offshore resulting in S$1.0 million lower revenue and lower contributions from West Park BizCentral and Eightrium amounting to S$0.9 million and S$0.4 million respectively, partially offset by S$1.6 million higher revenue from Solaris.

Property operating expenses were S$3.6 million in 3Q FY2018, S$0.8 million higher than 3Q FY2017 mainly due to higher property expenses incurred for Solaris.

Net property income was 8.8% lower at S$16.2 million in 3Q FY2018 from S$17.8 million in 3Q FY2017 mainly due to the abovementioned reasons.

The decrease in interest income of S$0.2 million was related to the repayment of the S$55 million interest-free loan from the Sponsor.

The decrease in finance expenses of S$0.3 million was mainly attributed to lower gross borrowings following the redemption of notes due in May 2018.

The reduction in Manager's management fees of S$0.1 million was due to lower distributable income which resulted in lower base fee.

Other trust expenses comprised largely professional fees and on-going listing expenses. The reduction in other trust expenses of S$0.2 million was largely attributed to lower professional fees.

Total return before distribution was S$1.1 million lower due to lower net property income and was partially offset by lower finance expenses, other trust expenses and Manager's management fee.

Non-tax deductible items were S$0.1 million lower mainly due to lower Manager's management fee in units.

Income available for distribution to Unitholders was S$13.2 million in 3Q FY2018, 8.6% lower than 3Q FY2017 largely due to lower net property income.

Commentary

Based on advance estimates, the Singapore economy grew by 2.6% on a year-on-year ("y-o-y") basis in the third quarter of 2018, easing from the 4.1% growth in the previous quarter. On a quarteron-quarter ("q-o-q") seasonally-adjusted annualised basis, the economy expanded by 4.7%, faster than the 1.2% growth in the preceding quarter.

The manufacturing sector grew by 4.5% y-o-y in the third quarter of 2018, slower than the 10.6% growth in the previous quarter. Growth was supported mainly by output expansions in the electronics, biomedical manufacturing and transport engineering clusters. On a q-o-q seasonally-adjusted annualised basis, the manufacturing sector expanded at a faster pace of 7.6% compared to the 2.9% growth in the preceding quarter.1

Singapore's manufacturing activity continued to expand in September 2018 but at a slower pace, with the Purchasing Managers' Index ("PMI") falling to 52.4. PMI for the electronics sector posted a reading of 51.4.2

Rentals of all industrial properties fell by 1.4% and 0.1% in 2Q 2018 y-o-y and quarter-on-quarter respectively. The multi-user factories, single-user factories and warehouse rental indices have receded 0.7%, 4.2% and 3.8% y-o-y respectively, whilst business park rentals expanded 5.3% y-oy. In 2Q 2018, vacancy rate for all industrial space rose 0.3 percentage points q-o-q largely due to a 0.5 and 0.4 percentage points increase in multiple-user and warehouse vacancy rates respectively3.

  1. Source: Ministry of Trade and Industry’s press release dated 12 October 2018.
  2. Source: Singapore Institute of Purchasing & Materials Management publication.
  3. Source: JTC quarterly rental index of industrial space.