Cache Logistics Trust

Cache Logistics Trust posted 3QFY14 results which were largely in line, with distributable income at $16.5m (+10% y/y, -1% q/q) and DPU of 2.13¢ (-1% y/y, -1% q/q) This brings DPU for 9MFY14 to 6.51¢ (+5%), representing an annualized yield of 7.3%. During the quarter, gross revenue rose 8% to $20.7m and NPI rose 9% to $19.6m, primarily attributable to rental contribution from new acquisitions made in 2012 and 2013 as well as built-in rental escalation within the portfolio The lower DPU was largely due to a recent placement of 70m units in March this year, with proceeds used to finance the acquisition of a warehouse, Precise Two. Cache continues to maintain portfolio occupancy at 100% in 3Q13, versus the Singapore average warehouse occupancy of 92.8%1, while the group has a relatively high Weighted Average Lease to Expiry (WALE) of 3.4 years. Overall fundamentals remain strong, with an aggregate leverage of 29.2% and a healthy interest coverage of 6.4x, while 70% of the REIT’s entire borrowings are hedged with fixed interest rates, enabling considerable certainty over financing costs. Going forward, Cache believes the global economic and political uncertainty and an increased incoming warehouse supply over the coming years is largely balanced with resilient end-user demand for quality logistics warehouse space and the efforts underway for the establishment of new port infrastructure. Barring any unforeseen market circumstances, expects to continue to deliver continued growth for 2013. At current price, Cache trades at an annualized 7.3% yield and 1.2x P/B versus the Singapore’s industrial REIT average of 7.3% yield and 1.1x P/B. Latest broker ratings as follows: CIMB maintains O/p with $1.33 TP OCBC maintains Buy but places $1.30 TP under review