Monday, 23 April 2018

Takeaways from Viva Industrial Trust AGM 2018

Viva Industrial Trust AGM 2018

Date: 20/04/2018

Turnout: Full House

Time: 10 am

I was given a voting slip upon registration. That means the voting and counting of votes will be done manually. A rarity these days.

The AGM started with a presentation by the CEO followed by the Q&A.

Before the Q&A proper, the floor was requested by the chairman to refrain from asking questions about the merger with ESR. This is understandable considering the confidential nature of such deal.

I only captured some of the Q&A as follows.

Q: There will be a 10% vacancy to be filled at UE Bizhub next year. And the rental support will be terminated in Nov 2018. What does the board intends to do?

A: The management and board are taking steps to deal with the above. 10% vacancy sounds alot but it only represents 3 units of the property.

The current rental is $5/sqft. They are trying to increase the rental but need to find balance with trying to retain tenants.

Maximum rental in the area is $5.50/sqft.

Q: Will Viva Business Park still continues to contribute positively to the performance of VIT?

A: Going forward the management will continue to upgrade the park to make it attractive and relevant to tenants.

Regarding the relatively short land lease left, JTC has a policy to extend land lease and VIT's management is in talk with them regarding this issue.

One good thing about AGMs is that I always learn new things from attending these meetings.

So land lease expiry is not the end of everything for JTC property owners since JTC has a policy to extend the land lease if necessary.

Q (this question was asked by yours truely): Is there any plan in place by the management regarding Jackson Square since the remaining land lease for this property is only about 11 years left and the relatively low occupancy is causing a drag to the overall portfolio occupany rate?

A: The management is also discussing about this land lease issue with JTC. The plot ratio which can go up to 2.5 for this property, is still not maximised yet.

Jackson Square is still classified as a B1 zone.

Q: Is VIT planning to expand overseas?

A: Yes, they are looking at places such as Australia and Malaysia. But they need to find earnings accretive properties. Since their current yield is about 8%, this hampers their acquisition plans as they need to find properties that can match or enhance the yield.

Resolutions: I left before the results due to other appointment.

Summary and Observations

Both Chairman and CEO of VIT are candid and appear sincere when replying to the shareholders. I don't see any attempt to brush off questions asked.

In fact the chairman commented the questions asked are good quality questions.

I find it heartening that the board is looking beyond Singapore as the market here is really restrictive for growth as compared to overseas. And it is assuring to hear from the CEO that the acquisitions must be yield accretive.

Last year was a great year in terms of performance by VIT. I reckon it should continue this year.

Share price should return to the $0.9+ levels (at least) once the talk with ESR is a done deal.

I'm looking to add more to my holdings.

Last but not least, the additional 'dividend' from the AGM :  )

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