19 Tai Seng Avenue (Viva Industrial Trust)Viva Industrial Trust's 19 Tai Seng Avenue (Viva Industrial Trust)

Singapore-listed industrial stapled security Viva Industrial Trust (SGX:T8B) announced on 29 July that it is in the process of acquiring the properties at 19 Tai Seng Avenue and 11 Ubi Road 1 for SGD42 million and SGD80.7 million respectively.

19 Tai Seng Avenue, a seven-storey industrial building with a mezzanine level, will be acquired from Home- Fix D.I.Y. Pte Ltd while 11 Ubi Road 1, a two-storey and seven-storey single-user light industrial building with a basement carpark, will be acquired from Meiban Investment Pte Ltd.

Upon acquisition, Viva Industrial Trust will enter into lease agreements with both vendors to lease back the respective properties.

Total acquisition cost including land premiums, stamp duties and relevant fees is estimated to be SGD137.9 million. Viva Industrial Trust has said that it intends to fund this through a combination of debt and equity.

“The managers are considering undertaking a private placement of new stapled securities to institutional and other investors to raise gross proceeds of up to SGD70.0 million to part finance the total acquisition cost. The balance thereof will be funded by debt”, said Viva Industrial Trust in a statement on the possible private placement.

The acquisition is expected to increase Viva Industrial Trust’s weighted average lease expiry (WALE) by rental income to 4.2 years from 3.3 years. Portfolio occupancy will also improve to 83.4% from 80.0%, said the trust.

Acquisition of both properties are expected to be completed by 3Q 2015.

Units of Viva Industrial Trust closed 1.25% lower from its previous trading day to end at SGD0.79.

19 Tai Seng Avenue (Viva Industrial Trust)
19 Tai Seng Avenue (Viva Industrial Trust)

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.