Cambridge Industrial Trust

Cambridge Industrial Trust: Daiwa reiterated Underperform with revised TP of $0.680 (prev: $0.670) a slight premium to NAV despite new acquisition of 12 Ang Mo Kio Street 65 announced yesterday. The acquisition is a 6-storey purpose built light industrial building with 180,424sf GFA with 36 years remaining tenure, bought at $220psf (vs last transacted $319psf in vicinity). The building is occupied by 2 tenants, making up 85% occupancy rate, therefore comes with concentration risks. Yield on cost of 5.3% is unattractive. The house accounts for new revenue contribution and expected rental rates and occupancy rate increase based on expressed intention of existing tenants to take up the remaining space, but TP is only marginally higher at $0.680. TP is undemanding at 1.05x DDM multiplier vs historical average of 0.88x.