Cambridge

Cambridge: to sell its 69.4% stake in Lam Soon Industrial Building for $140.8m, a 28% premium to its book value of $110m, and in line with StanChart’s expectation of $143m. The property is a freehold strata-titled industrial building with residential zoning. The buyer, a JV between Enviro-Hub and BS Capital, has plans to redevelop the building into residential apts through an en-bloc process. The house sees the sale as a positive surprise, as Cambridge may use the sale proceeds to acquire assets, or redevelop existing assets within its portfolio, for growth. Assuming these additions could be done at an average NPI yield of 7%, StanChart estimates the capital recycling exercise will be 6% accretive for the Reit. Look through leverage will likely fall to ~31% from 38% currently. Cambridge offers 8.7% FY14e yield and a strong 2013-16e CAGR of 5%. StanChart reiterates the Reit as its top pick among small cal industrial Reits. Keeps at Outperform with TP $0.82.