This article was recently published on,and is republished with permission.

KevinScully.a.9.13Kevin Scully, executive chairman of NRA Capital.Soilbuild Business Space REIT (SBSR) delivered a good set of 
results for FY2014.  

Key takeaways from the FY2014 results:

a) Revenue for 2014 was S$68.1mn – ahead of forecasts of S$66.3mn by 2.8%

b) Distributable income was S$50.2mn ahead of forecasts of S$48.5mn by 3.4%

c) DPU was 6.19 cents ahead of forecasts of 5.96 cents by 3.8%

d) SBSR has group gearing of 35.4% with average interest costs of 3.19%

e) About 25% of SBSR’s debt matures every year

f) S&P has a long term credit rating of BBB- with stable outlook

g) Interest cover is a healthy 5.3 times

h) Portfolio occupancy was 100% in FY2014

i) 23.5% of NLA up for rental renewal in 2015, 17% in 2016 and 11.5% in 2017

j) FY2014 rental revisions was 9.8%

k) Total portfolio now 1.0bn

SBSR is guiding for a stable performance in FY2015 subject to the renewing and releasing of expiries.  It has so far secured renewals for 20% of the space that is up for renewal in 2015.

Dispute with JTC

SBSR announced on 16 January 2015 that it has a rental dispute with JTC on Solaris which comprises about 30% of its total portfolio value. 

The dispute could impact the valuation of Solaris from $300mn to S$275mn and lower portfolio NAV from S$0.80 to S$0.77. There is no impact on DPU until 2018.  SBSR believes it has a strong case and is defending its position vigorously.


I still like SBSR which has a running DPU yield of about 8%.   The JTC has announced some weakness in industrial capital values and rentals but this doesn’t seem to affect SBSR which is in business parks.  Based on guidance, we can expect SBSR to at least be able to maintain in FY2014 DPU into 2015.

An 8% DPU yield is to me very attractive and should be sustainable over the next two years.  The dispute with JTC may impact its NAV and gearing but should not impact DPU.  SBSR remains an attractive yield play.

Management have clarified some of by questions on costs and revenue - you can find these in my Yield Portfolio commentary on the stock.

Recent story: 
SOILBUILD REIT: "8.0% FY15 yield in sight," says AmFraser

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