Viva Industrial Trust

Viva Industrial Trust: 4Q14 DPU slightly missed its own forecasts by 0.7%, coming in at 1.70¢, taking FY14 DPU to 6.83¢ (-0.5%). Gross revenue for the quarter was at $16.6m (+8.7%) and NPI at $11.0m (+8.6%) versus forecasts, driven by higher actual rental contribution from new business park space tenancies at UE BizHub EAST and partial rental contributions resulting from the acquisition of Jackson Square and Jackson Design Hub. This was partially offset by lower revenue from Technopark@Chai Chee, due to preparations ahead of the proposed asset enhancement initiative where certain lettable areas, which will be affected by the proposed AEI, were not marketed to potential tenants. Bottom-line was weighed by a 40.9% rise in finance expenses to $3.7m, due to the issuance of a $100m medium term notes on Sept ’14 Going forward, Viva Industrial Trust (VIT) guided that the outlook of the industrial property market is expected to be mixed, taking into account the fragile global economic outlook and lingering risks, such as potential global Ebola outbreak and repercussions from plunging oil prices. On the leasing front, rents for properties with higher building specifications, such as those located within business parks, and independent high-specs buildings, could see some upside potential due mainly to a tightening in supply. Leverage ratio stands at 44.3% with average interest costs at 3.8%, and portfolio occupancy is at 80.5% with a WALE of 3.8 years. At the current price, VIT trades at 8.5% FY14 yield and 1.06x P/B versus its industrial peer average of 7.3% yield and 1.1x P/B.