A COUPLE of rounds of equity fund- raising have diluted the fourth-quarter distribution per stapled security (DPS) for investors in business park owner Viva Industrial Trust but the trust manager said on Tuesday that it expects that to improve starting this quarter. It is also considering fund- raising via the use of perpetuals.
Noting that the trust started refurbishing its Technopark@Chai Chee business park - now renamed Viva Business Park - in the middle of last year, the trust manager's finance head Lawrence Chan said on the phone after a results briefing that income from the refurbishments will start coming in to lift DPSS starting in the first quarter of FY2016.
DPS for Q4 FY2015 dropped 3.9 per cent to 1.634 Singapore cents, from 1.701 Singapore cents the previous year, Viva said in a Singapore Exchange filing on Tuesday.
That was despite distributable income for the three months ended Dec 31 climbing 20.6 per cent to S$12.46 million from the previous year. Net property income was also up 24.5 per cent to S$13.73 million, on the back of an 18.5 per cent rise in gross revenue to S$19.70 million year-on-year.
The revenue increase was partly due to contributions from Home-Fix Building and 11 Ubi Road, which the trust bought in November 2015. That made up for lower-than-forecast revenue from Viva Business Park due to the asset enhancement initiative (AEI) there.
Viva's gearing stood at 38.6 per cent as at Dec 31, 2015, and Mr Chan said it is looking to reduce that "nearer to 35 per cent" via more fund-raising exercises over the next few years. But he said the trust does not have any concrete plans for more fund-raising yet and will embark on that only when acquisition targets arise. Though Viva has largely been raising funds by issuing new stapled securities through private placements, Mr Chan said he is also considering using perpetuals to raise funds in future.
The group's portfolio had seven properties in Singapore worth S$1.1 billion altogether at the end of 2015, and the collective value will rise to S$1.2 billion once it completes its acquisition of a property at 30 Pioneer Road and completes the AEI at Viva Business Park, it said in a statement.
Wilson Ang, chief executive of the trust manager, said on the phone that Viva may look at some of the more established markets in the Asia-Pacific such as Australia for acquisitions.
Viva stapled securities closed one cent higher at S$0.69 on Tuesday after the results were released.
An earlier version of this article incorrectly stated that Viva’s Q4 2015 revenue from Viva Business Park was lower year-on-year. It was lower than forecast but actually slightly higher year-on-year. The article above has been revised to reflect this.