SINGAPORE (Oct 30): Viva Industrial Trust reported a 16.8% rise in 3Q17 revenue to $28.3 million from a year ago, mainly due to additional contributions from 6 Chin Bee Avenue and Viva Business Park.

3Q17 NPI increased 18.3% y-o-y to $20.6 million. 3Q17 DPU increased 5.0% y-o-y to 1.9 cents.

As at Sept 30, VIT’s portfolio occupancy stands at 90.9% , up from 88.6% a year ago. To date, 108,000 sf of new leases has been secured while 287,000 sf of leases -- representing 67% of the total leases due for renewal -- has been renewed.

In a Monday report, OCBC says VIT delivered a strong set of 3Q17 results that came in within expectations. With the Downtown Line Station at Expo opening on Oct 21, analyst  Deborah Ong says better accessibility to UE Bizhub will help positive rental reversion. VIT’s manager has also been busy hosting promotions to bolster footfall.

Furthermore, Ong continues to see upside potential for VBP given that only 87.3ppt of the 96.2% committed occupancy for “white space” contributed to 3Q17 income. The asset clocked an average monthly footfall of 432,000 in 3Q17 and recorded a 19% increase in carpark income from 2016.

“As we roll our estimates forward and adjust our assumptions, our fair value increases from $0.895 to $0.90. VIT currently enjoys an FY17 yield of 7.9% and FY18F yield of 8.0%,” says Ong of OCBC who is maintaining its “hold” call.

Meanwhile, RHB likes VIT for similar reasons, with asset enhancement initiative (AEI) works in VBP are now fully completed.

“The spillover effects from the vibrant VBP retail unit are starting to show in the business park component, with the increase in tenant leasing enquiries and positive rental reversions of 3% ytd,” says analyst Vijay Natarajan in a Monday report.

“We see more upside for occupancy and rental rates at VBP’s business parks segment, on the back of favourable demand-supply dynamics for business park space.”

Viva had earlier submitted an application to allow tax transparency for rental income support payments, in light of the amendment in the Income Tax Act in 1Q17. If granted, RHB says there could also be potential savings from taxes that could lift RHB’s FY17/18 DPU by 3%.

RHB has a “buy” with a $1.02 target price. “We lift our FY17-18 DPU by 2%/3% to reflect better than expected contributions from VBP and higher gross margins,” says Natarajan.

As at 11.17am, units of VIT are trading at 96 cents with a DPU yield of 7.9 cents for FY17.