Wednesday, July 15, 2015

Soilbuild REIT

Soilbuild REIT delivered 2Q15 DPU of 1.615¢ (+7.7% y/y) on a 17.9% jump in 2Q15 distributable income to $14.3m. matching street estimates.

Gross revenue and NPI of $19.6m and $16.7m were higher by 17.2% and 19%, due largely to its four acquisitions, Tellus Marine, KTL Offshore, and Speedy-Tech that were completed in 2014 and Technics in 2015.

The industrial REIT also achieved positive rental reversions for new leases (+1.6%) as well as renewals (+5%) during the quarter.

Portfolio occupancy across its 3.5m sf net leasable area dipped slightly q/q to 99.8% (-0.2ppt), while weighted average lease to expiry lengthened to 4.5 years from 4 years in 1Q15.

Aggregate leverage improved 2.2ppt q/q to 36.3% with average interest cost of 3.49%, a notch higher, following the recent issue of its three-year $100m 3.45% medium term note programme.

The current leverage leaves some headroom ($75m) for debt financing based on its 40% target level.

At $0.855, Soilbuild Reit trades at 1.08x P/B and offers a 7.6% annualised 2Q15 yield. The street has 6 Buy and 1 Sell rating with a consensus TP of $0.94, indicating a potential upside of ~10%.

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