May and June 2018 Updates

Dividends Received

CapitaLand: $480.00
OCBC: $4.25
Mapletree Logistics Trust: $141.40
Netlink Trust: $129.60
RHT Health Trust: $114.00
Suntec Reit: $97.32
Viva Industrial Trust: $91.90

Total: $1,058.47

Counters Purchased

CapitaLand: 5 lots

Counters Sold

Nil

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 :  )

Jan and Feb 2018 Updates

Investments

Received the first round of dividends for this year as follows.

SingTel dividends S$490

Suntec dividends S$104.16

CCT dividends S$164

Viva dividends S$92.85

MLT dividends S$152.42

Total dividends received: S$1,003.43.

Career

Just closed the accounts for my new company after venturing out on my own last year. Managed to achieve ROI within the first year of operations. Shall continue to work harder to grow the business.

Portfolio Review: Viva Industrial Trust

Managed to find time to review the performance of my holdings.

For Viva Industrial Trust (VIT), the FY2017 results are nothing short of stunning and vindicated my decision to pay a premium to purchase the units three months ago.

The glowing result is mainly contributed by the post-AEI Viva Business Park and the logistics property at 6 Chin Bee Avenue. UE BizHub East also shows marginal increase in revenue contribution.

The following slides show it all.

 

In a span of one year (2016 end - 2017 end), share price of VIT ran up from S$0.755 to S$0.94. An increase of nearly 20 cents. This is justifiable.

As an income investor, one of the criteria I look out for when adding a stock into my long term portfolio is the dividend payout. In this aspect VIT remains one of the best among the industrial REITs.

I do have a concern regarding the WALE of 2.6 years though I won't be losing sleep over this as VIT is doing quite well in terms of tenancy retention. However this shall be a point of monitoring for me.

Fundamentally, VIT remains solid. Outlook in my opinion, is looking good especially for both business parks.

Will I continue to keep VIT in my portfolio? Absolutely.

Will I add more? Yes.

Now comes the golden question. How do I see the possible merger of ESR and VIT?

I will answer this in the next post since the reply will not be a short one.

Recent Actions - Nov and Dec 2017

Short update for the months of November and December to conclude the year.

1) Bought 5,000 shares of Viva Industrial Trust @ $0.955 for my income portfolio. Did the same for wifey's as well.

2) Bought 3,000 shares of SingTel @ $3.64 for wifey as part of her income portfolio after recent XD.

3) Bought 10,000 shares of RHT Health Trust as a punt on the acquisition by Fortis.

4) Received dividend of S$325 from ISOTeam.

5) Received dividend of S$99.32 from Suntec Reit.

6) Sold 3,000 shares of Wilmar after signs of price weakness and failure to break through resistance. Could have earned more but decided to lock in profits first.

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.

Cheers.