Viva ends flat amid rate concerns

SINGAPORE - Viva Industrial Trust, a Singapore business and property trust, ended its first day of trading unchanged after opening lower amid concerns that interest rates will rise and make it difficult for real estate investment trusts to raise funds, Bloomberg reported.

The shares opened at 76.5 Singapore cents at 2 pm local time on Monday, 1.9 per cent lower than the initial stock offering price of 78 cents apiece. Viva Industrial had raised S$365 million through a share sale to Chinese property tycoon Tong Jinquan and the public.

Singapore property trusts face refinancing risks when borrowing costs rise, which may force them to sell assets or shares to boost funding, Fitch Ratings said.

“REITs are not in favour now,” said UOB Kay Hian analyst Vikrant Pandey. “There was the US news that the Fed tapering is not off the cards yet, so in such an environment where interest rates are expected to rise, REITs will be out of favour.”

REITs and business trusts were the biggest fund raisers in Singapore’s IPO market in the past year, according to data compiled by Bloomberg. The FTSE Straits Times Real Estate Investment Trust Index, comprising 32 trusts, has declined 5 per cent this year after gaining 37 per cent in 2012.

In July, Viva bought a mixed-used development, UE BizHub East, in Changi Business Park from United Engineers for S$518 million. This property, together with two other developments in Tuas and Chai Chee, are the assets backing the trust.