Cache Logistic Trust

Cache Logistic Trust (S$0.915): Shopping for sixth warehouse in Australia

Cache Logistic Trust has signed a sales and purchase agreement with Muzzie to acquire its sixth Australian distribution warehouse facility at a total acquisition cost of A$10.5m.

The single-storey warehouse is built on a 22,760sqm freehold land and has 6,276 sqm of GLA, which also comprises a standalone training building and ancillary office space, and is adjacent to a previous warehouse acquired in early Oct '15 at 203 Viking Drive.

Upon completion of the deal, the warehouse will be leased back to existing tenant, Western Star Trucks Australia, a commercial truck importer and distributor, until August 2023, with a minimum annual rental escalation of 4% or inflation if higher.

As a result, the REIT expects the acquisition to improve income diversification and promotes steady income growth.

As at 27 Nov '15, the property has a WALE of 7.7 years, and thereby could extend Cache’s portfolio WALE to 4.46 years from 4.42 years in Sep 2015.

The warehouse landlord intends to finance the acquisition through proceeds from a private placement launched on 3 Nov, and AUD bank borrowings, which may lift its aggregate leverage to 36% from 35.6%.

At the current price, Cache Logistic Trust is trading at 0.95x P/B and offers a 8.1% indicative yield. The street has 4 Buy and 4 Hold ratings with a consensus TP of $1.05 on the REIT.