Analysis of Viva Industrial Trust

Current Price on 15th Dec 2015 = $0.685

• Yield = 9.62%  
• Price-to-book Ratio = 0.824
• Assets per unit = $1.526
• Debt per unit = $0.642 (including current liabilities)
• Gearing = 40.7%

Viva Industrial Trust has recently put up a preferential offering and a private placement which was, to me, quite a disaster. Their preferential offering was not fully taken up by investors and their anchor investor has to subscribe to additional units. Well, it does show some confidence in this REIT by the anchor, but we do need the same sentiment from the retail investors as well.

With a yield of 9.62%, it is one of the highest pure Singapore REIT, although now Sabana REIT has higher yield at 10%. Its price-to-book ratio is at 0.824, which means we are buying at 18% discount which is not bad. Gearing is at a pretty high rate of 40.7%.

Viva Industrial Trust has been expanding aggressively at a time where times are uncertain which is definitely unusual. Definitely, the risks are much higher now and it shows in the yield and trading price. Well, I am vested with 79,100 shares (I did not subscribe to their preferential offering) and I will need to ride it through with them.

One potential capital appreciation is a potential buyout by a third party as it is relatively cheap and small which makes it a target just like Saizen REIT. If Saizen REIT, which in my opinion is probably one of the weakest REIT, can be acquired at NAV price, I believe any small REIT can be a potential target. Let's see whether are there any surprises for small REITs.