SGD New Issue Review : Viva ITrust 4Y 4.5%

NEW ISSUE: VIVA ITRUST MTN PTE. LTD. 4-YR ISSUE – IPG 4.5% AREA**

ISSUER:  Viva iTrust MTN Pte. Ltd.
GUARANTOR: The Trust Company (Asia) Limited (in its capacity as                trustee of Viva Industrial Real Estate Investment Trust)
SERIES:   001
STATUS:  Direct, unconditional, unsubordinated and unsecured Notes
EXPECTED ISSUE RATING: BBB-
FORMAT:  Reg S, S274 & 275 of SFA, issuance off S$500 Million Multicurrency Medium Term Note Programme
ISSUE SIZE:  TBD
TENOR: 4 years
INITAL PRICE GUIDANCE: 4.5% area
UOP:  In accordance with the Programme
PAYMENT:  Semi-annual, actual/365 (fixed)
DETAILS:SGD250K/Singapore Law/CDP
LISTING: SGX-ST

– Viva SGD 4yrs announced with strong anchor orders
– Initial price guidance: 4.5% area
– Acquisition announcement : To acquire Jackson Square (Toa Payoh) and Jackon Design Hub (Tai Seng St) for SGD 112.8 mio http://www.theedgesingapore.com/the-daily-edge/business/49929-viva-industrial-reit-to-acquire-jackson-square-and-jackson-design-hub-for-1128-mil.html

COMPS:

Ascendas India Trust 3.8% 08/27/19    100.25    3.74%
AACI REIT 3.8%  05/21/19  100.00    3.80%
Cambridge Reit 4.1% 04/29/20 100.00    4.10%

This is the first time I am looking at this business trust (not REIT) with a market cap of SGD 487.8 mio listed just in Nov 2013 and majority owned (64.38%) by Tong Jinquan, another Chinese real estate mogul billionaire. http://www.nextinsight.net/index.php/story-archive-mainmenu-60/921-2013-chinahk/7637-tong-jinquan-prc-property-baron-behind-viva-industrial

Graph : Viva Industrial Trust stock price since IPO in Nov 2013

There are little financials to look at or any analysis to be made.

I found that Viva Trust has debt/assets of 38.1% and supposedly pays a dividend of 8.5%. https://tradehaven.net/market/equity-thursday-bad-vibes-in-reits/

As for its ratings, Viva Industrial Real Estate Investment Trust is rated BB+ by S&P. I am not sure why it is called a “real estate investement trust” because it is a business trust structure.

And I am also unsure why the bond issued by Viva iTrust MTN Pte. Ltd, a subsidiary, is rated higher at BBB-.

Let’s take it at face value.

Their assets are all in Singapore http://www.vivaitrust.com/portfolio.html. I am surprised at their returns and dividends which is amongst the highest in S-Reit and trusts space. (Pls refer to the table in https://tradehaven.net/market/equity-thursday-bad-vibes-in-reits/.

It looks like a good deal to me.

If we pull out all the Reit-type bond issues this year, we have the list below.

1. Suntec Reit Baa2 3.35% 02/2020 6 years
2. Capitamall Trust A2 3.08% 02/2021 7 years
3. Ascendas Reit A3 2.5% 05/2019 5 years
4. Central China Reit Ba3/BB- 6.5% 05/2017 3 years5. CMT A2 3.48% 08/2024  10 years
6. CCT Baa1 2.98% 02/2021 6.5 years
7. MAGIC Baa1 3.2% 09/2021 7 years
8. Starhill Global Reit BBB+ 3.5% 02/2021 7 years
9. AACI Reit unrated 3.8% 05/2019 5 years
10. Rickmers Trust unrated 8.45% 05/2017 3 years
11. Cambridge Reit unrated 4.1% 04/2020 6 years
12. Croesus Retail Trust unrated 4.6% 01/2017 3 years

I say they come close to Croesus in terms of size. Croesus just declared dividends of 11.1% !!!

At 4.5% for 4 years for a newcomer name, I think it is a fair price given that interest rates have spiked higher and 4 year interest rate is at 1.58% today. 1.58% was where the 5 year interest rates were earlier this year.

Good luck !