Viva Industrial Trust Has A Yield Of 8.6% Now: 3 Things Investors Should Know About It

Viva Industrial Trust (SGX: T8B) is a stapled trust that consists of a real estate investment trust and business trust. In Singapore’s REIT universe, Viva Industrial Trust’s 8.6% distribution yield is one of the highest at the moment.

Viva Industrial Trust invests in business parks and industrial properties. While it can invest in properties within the Asia-Pacific region, its current portfolio consists of eight properties that are all located in Singapore. As of 30 June 2016, the trust’s portfolio is valued at S$1.19 billion and has an aggregate gross floor area of 3.58 million square feet.

Here are three things about Viva Industrial Trust that may interest investors:

1. Mixed-bag for the first-half of 2016:

The chart below shows the results of Viva Industrial Trust in the first-half of 2016:

Source: Viva Industrial Trust second-quarter investor presentation

You can see that the trust’s gross revenue, net property income (NPI), and distributable income have all grown by over 25% year-on-year.

But, the above improvements did not translate into a higher return to unitholders. The trust’s distribution per stapled security (DPS), had declined by 8.9% due to a 37.4% jump in the number of securities outstanding.

2. Occupancy rate

The occupancy rate for a REIT is an important metric to look at since it gauges the strength of the market demand for the REIT’s properties.

As at 30 June 2016, Viva Industrial Trust’s overall portfolio occupancy level stood at 87.9%. This is lower than some other Singapore-focused industrial REITs such as Soilbuild Business Space REIT (SGX: SV3U) which reported a portfolio occupancy level of 92% in the second-quarter of 2016.

Nevertheless, the occupancy rate for Viva Industrial Trust has been improving over the last few years:

Source: Viva Industrial Trust second-quarter investor presentation

3. Diversified customer base

The chart below shows Viva Industrial Trust’s tenant profile:

Source: Viva Industrial Trust second-quarter investor presentation

You can see that the trust’s tenants come from a wide variety of trade sectors. Moreover, the companies renting space from Viva Industrial Trust’s portfolio are also varied. 36.8% are SMEs (small, medium enterprises), 4.8% are government-linked companies, and 58.4% are multinational corporations.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.