Brokers' take

Viva Industrial Trust | Buy Target price: S$0.97 Oct 11 close: S$0.94 RHB Research Institute

Viva Industrial Trust (VIT) announced that it has declined an offer from Ho Lee Group Pte Ltd (HLG) for the acquisition of an industrial property in Ang Mo Kio at a purchase consideration of S$300 million pursuant to the right of first refusal (ROFR) agreement. HLG made the offer to Viva as it received an offer from an unrelated third party to acquire the property at the above mentioned price.

While the tenants are of good quality, VIT noted that the large equity fundraising required to acquire the asset would make it non-accretive to existing unit holders. We view the move favourably and shows that the manager is careful in picking the assets to deliver growth. Besides this property, VIT has a ROFR pipeline to three industrial properties in South Korea and one in Shanghai. Its gearing remains relatively high at 39.1 per cent and future acquisitions are expected to be funded by a combination of equi…