AK gets asked about VIVA Industrial Trust from time to time and why AK never blog about the REIT? Alamak. It happened again today.
I decided to share this exchange I had with a reader and without saying too much, I hope it is clear enough:
I looked at Viva before and I was going to publish a blog post on it in 2014 but decided not to. In essence, I wasn't interested in the REIT because:
1. I was not sure that UE Bizhub's valuation was realistic.
2. I didn't like that its Chai Chee property had 17 years left to its lease. Now, 15 years left.
3. I was wary of the massive financial engineering to boost dividend yield which would otherwise have been 25% lower.
I just didn't feel good about the REIT. I still don't.
Other examples of financial engineering:
1. K-REIT: 17 for 20 rights issue.