Viking A Property Company With A Difference

Sydney, June 14, 2007 (ABN Newswire) - BRISBANE, Australia, June 14, 2007 (Starlink Media) – Australia’s Viking Industries Limited has built up a lucrative portfolio of waterfront assets along the eastern seaboard of Queensland state as part of its marine services focus. Property, however, is now the name of the game for the company, according to managing director John Down.

In a recent interview with Investor TV, Mr Down, who is also a major shareholder in the company, described Viking as “a property company with a difference.”

The big shift in focus came in November 2006, when Viking announced it had reached agreement with Port of Brisbane Corporation to acquire the freehold over the company’s leased 40 hectare Brisbane Marine Industry Park at Hemmant, for a cost of A$45.5 million.

The company’s market capitalisation has since grown to nearly A$200 million on the Australian Securities Exchange. Based around three divisions of Marine Services, Industrial Development and Viking Properties, Viking sees exceptional potential in its waterfront assets in Brisbane, Cairns and the Gold Coast.

“The Viking model involves using the waterfront assets to give us the highest and best return from those, whether they’re the development of marinas, whether they’re the development of shed-type facilities for boat refit and repair. The rest of it is industrial estates which really, in many ways, underwrite our asset base,” he said.

“Viking going forward aims to use that model to do further acquisitions in the marine industrial estate areas down the eastern seaboard of Australia.”

The company’s Marine Services Division led by Joe Akacich has played an important role in Viking’s development, he said.

“[Marine Services] is a facilitator for the acquisition of expensive waterfront land that has expensive waterfront assets that can’t otherwise be utilised. It also provides significant independent cash flow to the business, which in many ways underwrites our dividend policy,” Mr Down said.

The company’s acquisition in 2006 of industrial real estate and property management business King & Co. has given it the personnel to mastermind the drive into industrial property. King & Co. manages Viking’s Industrial Development Division, while Viking Properties acts as the trustee of the Viking Property Trust.

“The concept has been to develop our own properties on our own site and sell them into the property trust. We’re not reinventing the wheel particularly, but we do have what we believe to be a significant advantage over competitors in this area because obtaining good quality product is always difficult, and we can have some level of control over that,” Mr Down said.

Already managing $50 million worth of properties, Viking aims to increase the Trust’s asset base to reach $500 million by 2011 as part of its push into property funds management.

In Marine Services, Viking sees growth potential in servicing superyachts, the Australian navy and grey (commercial) boats.

Australia’s attraction as a tourist destination to the world’s rich is key to increasing the superyacht business. Viking’s access to the world heritage Great Barrier Reef via Cairns on top of the sun and surf-rich Gold Coast are the main drawcards in this regard.

“Cairns is a huge base for the Australian navy with patrol boats, its hydrographic ships and so on and we’re well positioned to facilitate refit and repair on the navy ships,” he said.

“The other market is the normal commercial, the grey boat market which is the ferries, the tugboats, the fishing boats.” Listed on the Australian stock market since December 1984, Viking has a strong record of dividend growth – something Australian investors value highly.

“We have a view that we should distribute the bulk of our profits. I’m not one of those people who think that we can invest dividends better than our shareholders - they’re entitled to a return on their money every year,” Mr Down said.

“I’ve made certain commitments to endeavour to grow those dividends at somewhere around 10 per cent a year.”

The alignment of shareholders and managers is a well discussed concept in corporate governance, and it is this regard that Mr Down sees an advantage for Viking.

“We don’t want speculators in the stock. We want people who are prepared to ride with us, who understand that we are all in it with them.

“There’s no difference between my interests and any other shareholder’s interests fundamentally, and I think that creates an interesting aura of credibility,” he said.