Soilbuild REIT clinches industrial property for $24.4m

Its gearing will inch up to 32% post acquisition.

Mainboard-listed Soilbuild REIT revealed the acquisition of 20 Kian Teck Lane, a light industrial property for a total consideration of S$24.4m. The property has around 26 years remaining on its land lease and a total GFA of around 93,767 sqft.

DBS notes that the vendor, Speedy-Tech, which is part of Integrated Micro-Electronics, Inc that is listed on the Philippine stock exchange, will lease the property back for an initial lease period of 10 years with annual escalations.

According to DBS, the acquisition will cause Soilbuild REIT’s gearing to inch up to around 32%

“We understand that the acquisition is line with SBREIT’s portfolio book yield and is accretive to earnings.
Assuming an initial yield of c. 7.0%, and 100% debt funding, this acquisition will be marginally DPU accretive at c. 1.5% in FY14. Gearing estimated to rise to c. 32%, within management’s comfortable gearing ratio ceiling of c.35%.” noted DBS.