Monday, May 25, 2015

Viva Industrial Trust

Viva Industrial Trust: Maybank-KE issued an unrated note on Viva Industrial Trust (VIT), citing the industrial trust as a defensive play through late-2018 amidst the backdrop of a supply glut in the industrial space.

VIT has six properties in Singapore - two business parks (72% of 1Q15 revenue), two factories (15.9%), one hotel (9.9%), and one warehouse (2.2%), with total NLA of 2.3m sf, long weighted average land lease to expiry of 40.6 years and gross development value of $850m.

69% of income is locked in under long-term master leases with rental support. As such, income cyclicality for VIT is lower relative to other industrial REITs, and especially crucial when the supply glut is expected to last till 2019.

For VIT, DPU growth in FY16 is expected to be anchored by the completion of AEI work at Technopark @ Chai Chee (31% of revenue). This involves the conversion of under-utilized carpark and business-park space into retail, which has since secured an anchor tenant agreement with Decathlon.

At the current price, VIT is trading at 1.07x P/B and an indicative yield of 9.3%.

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