3 Things Investors Should Know From Viva Industrial Trust’s Latest Earnings

Viva Industrial Trust (SGX: T8B) is a stapled trust that consists of a business trust and real estate investment trust. It invests in business parks and other industrial properties. Currently, Viva Industrial Trust’s portfolio comprises nine properties in Singapore

Two weeks ago, the trust reported its 2017 third quarter earnings. Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from Viva Industrial Trust’s income statement for the third quarter of 2017:

Source: Viva Industrial Trust 2017 third quarter earnings press release

The REIT produced good growth, as gross revenue, net property income, distributable income, and the distribution per stapled security (DPS), all increased.

The trust’s positive performance was driven mainly by growth in Viva Business Park, and new contributions from 6 Chin Bee Avenue. In addition, the overall occupancy rate for Viva Industrial Trust increased from 88.6% a year ago to 90.9% due to the completion of the AEI (asset enhancement initiative) in Viva Business Park.

2. Lease expiry profile

A REIT’s lease expiry profile is useful to study because it gives us insight on the stability of the REIT’s rental income. The chart below shows Viva Industrial Trust’s lease expiry profile:

Source: Viva Industrial Trust 2017 third quarter earnings presentation

One positive aspect of Viva Industrial Trust’s lease expiry profile is that it is well-staggered – there is no high concentration of lease expiries in any particular year. What’s more, with 40% of the trust’s leases expiring only after 2021, there’s good visibility of its income for the next few years.

As of 30 September 2017, the weighted average lease to expiry for Viva Industrial Trust was 2.8 years.

3. Growth in DPS

Here’s a table showing the historical DPS for Viva Industrial Trust (the green line) and the average DPS for a basket of comparable industrial REITs (the grey line):

Source: Viva Industrial Trust 2017 third quarter earnings presentation

The industrial property sector has been facing significant challenges recently due to an increase in supply of industrial property space. As such, it is not surprising to see that the average DPS for industrial REITs has declined in the past few quarters.

Yet, Viva Industrial Trust has shown that it could grow its DPS even when the industry’s DPS was trending downwards. In other words, the trust has managed to perform even when its peers have been facing significant headwinds.

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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.