Friday 3 November 2017

Viva Industrial Trust - My First Foray Into Industrial REITs

Today (actually it's yesterday since it has passed midnight) marks my first foray into the industrial class of REITs if I don't consider Mapletree Logistics Trust as industrial.

Viva Industrial Trust is not a pure industrial REIT. It has a hotel among its properties.

I have been monitoring Viva Industrial Trust for some time. When the price dropped more than the dividend post-XD today, I decided to take advantage of this and buy into this counter @ $0.955.

Ideally I would like to go in below $0.95 but guess I am not that disciplined.

Results from Viva's latest quarter look promising.

Comparing Y-o-Y and Q-o-Q,

Other results,

Gearing is reasonable at <40%.

WALE is 2.8 years. To be honest I would prefer this to be higher.

And portfolio occupancy is 90.9%.

As a matter of fact, the above figures allude to the good fundamentals and good management of the trust.

Furthermore with the opening of the Downtown line station connecting directly to UE BizHub East, there is a real possibility of upcoming positive rental reversion and increment of the property value.

However the deal clincher for me is the AEI done for their Viva Business Park (VBP) in Chai Chee. I've been to VBP several times in the past for business meetings before they commenced the AEI.

Post-AEI, I've went back several times with my wife and what a world of difference the initiatives made!

The most obvious improvement is the number of retailers and anchor tenants such as Harvey Norman and Decathlon taking up space in the business park.

This is a far cry from the old VBP where majority of the tenants are commercial entities and the only retail shops on the ground floor are cafes and such.

The effort made for the AEI is actually visually-obvious. It changes the whole vibe of the business park. And I have to say I am impressed by what I see.

Paying at $0.955 a piece for Viva means paying a premium to its NAV and this is usually what I don't do.

However I see limited downside and much upside to the price due to the increased buying interest in this REIT, value-realisation of UE BizHub East and potential of increased income from VBP.

The way I see it, Viva will break $1.00 soon.

My plan when I placed the queue order today was this:

a) If the price appreciated within these few days, I might do a short term trade.

b) If the price drops, I will hold as part of my income portfolio. A dividend yield of nearly 8% doesn't hurt.


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