ARA LOGOS Logistics Trust - OCBC Investment 2020-04-29: Rebranding Of Cache Logistics Trust

ARA LOGOS LOGISTICS TRUST (SGX:K2LU) | SGinvestors.io ARA LOGOS LOGISTICS TRUST (SGX:K2LU)

ARA LOGOS Logistics Trust - Rebranding Of Cache Logistics Trust




Lower DPU to conserve capital

  • ARA LOGOS Logistics Trust (SGX:K2LU)’s (ALOG) (formally known as Cache Logistics Trust) 1Q20 gross revenue dropped 6.6% y-o-y to S$28.8m, largely due to
    1. transitory vacancy downtime between leases;
    2. conversion of Cache Gul LogisCentre from master lease to a multi-tenancy structure;
    3. lower signing rents for leases as compared to the previous leases;
    4. as well as a weaker Australian dollar.
  • Lower gross revenue was partially offset by additional rental contribution from the warehouse in Altona, Australia which was acquired in Apr 2019. NPI fell 7.3% y-o-y to S$22.0m, on the back of lower gross revenue and higher expenses from the conversion of Cache Gul LogisCentre.
  • In view of COVID-19 uncertainties, ARA LOGOS Logistics Trust retained S$2.5m or ~20% of total distributable income, factoring in potential rental deferment or waivers of tenants. As such, 1Q20 DPU declined 34.1% y-o-y to 0.997 S cents, making up 18% of our initial full-year forecast, which was below our expectations.




Portfolio occupancy remained strong but rental reversion was slightly negative

  • As at 31 Mar 2020, ARA LOGOS Logistics Trust’s committed portfolio occupancy improved q-o-q from 95.3% in 4Q19 to 97.1% in 1Q20. Rental reversion in 1Q20 was -0.1%, as compared to 9.1% in 4Q19, underscoring weak leasing momentum amid economic headwinds from COVID-19.
  • Looking ahead, 8.1%/33.0% of leases by GRI will be due for expiries in FY20 and FY21 respectively. As at 31 Mar 2020, ARA LOGOS Logistics Trust’s gearing stood at 40.8% which is on the higher end but no further refinancing is required until 2021.
  • We understand that ~100% of ARA LOGOS Logistics Trust’s tenants are still operating during ‘Circuit Breaker’ and ~20 tenants in Singapore have asked for assistance (mostly from SMEs) and 40% of tenants in Australia will fall under the JobKeeper support program.
  • Management will review the requests on a case by case basis and sees the 20% provisions as sufficient for now.


Rebranding to tap on collective expertise and resources






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-04-29
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.53 DOWN 0.74



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