CACHE LOGISTICS TRUST
K2LU.SI
Cache Logistics Trust - Cheerless Quarter
- 3Q15/9M15 results were within our expectations as Cache maintained 2.140 cents/6.425 cents DPU.
- Maintain NEUTRAL and SGD0.97 TP (2.8% total return).
- Overall occupancy declined further to 95.2% as it continues to be impacted by single-tenanted leases to multi-tenancies conversions.
- We remain cautious, given that its gearing level is slowly creeping up towards 40%, amid the difficult leasing market within the local warehouse industry.
3Q15/9M15 results within our expectations.
- Cache Logistics Trust (Cache) maintained 9M15/3Q15 DPU of 6.425 cents/2.140 cents respectively, which meets 77% of our full-year estimates.
- We note that its overall portfolio occupancy declined further to 95.2% from 98.3% in 2Q15. This was as it was impacted by the conversion of Pandan Logistics Hub from a master lease to multi-tenancy in July, as well as the interim space available for lease at the recently-completed DHL Supply Chain Advanced Regional Centre (DSC ARC).
Cache extends its footprint in Australia in 3Q15.
- Earlier this month, the REIT announced its fourth Australian acquisition, involving a warehouse located at 203 Viking Drive, Wacol, Queensland. Cache is looking to purchase the asset for AUD27m (SGD27.1m), which translates to a cap rate of 7%. The property is to be fully master-leased to Western Star Trucks Australia Pty Ltd (WSTA) with an annual rental escalation of 4% pa. The acquisition is to be fully-funded via debt.
Impact of Australian acquisition.
- We are expecting the acquisition to be accretive as it is fully-funded by debt. Its borrowings would be fully AUD-denominated and, hence, 100% naturally-hedged.
- While we like the fact that it is accretive to the portfolio, management expects the average leverage ratio to increase to 39.4% from 38.3%, which we deem to be on the high side.
Maintain NEUTRAL with TP of SGD0.97.
- We increase our FY15/FY16 DPU estimates by 0.6%/2.5% respectively, as we factor in the ongoing acquisition of the warehouse in Australia.
- However, in view of a difficult leasing market within the Singapore warehouse industry, we remain cautious and maintain our NEUTRAL call on the stock with a DDM-based TP of SGD0.97.
Ivan Looi
RHB Research
|
Ong Kian Lin
RHB Research
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http://www.rhbinvest.com.sg/
2015-10-23
RHB Research
SGX Stock
Analyst Report
0.97
Same
0.97
