Cache Logistics Trust

Cache Logistics Trust: 1Q14 results broadly in line. DPU fell 2.4% to 2.14¢, while distributable income fell 5.5% to $16.6m. Revenue and NPI both climbed 8.2% to $20.7m and $19.6m respectively, attributable to additional rental income higher rental and acquisition of an investment property in 2013. Portfolio occupancy was 100%, with WALE of 2.9 years. In the quarter, Cache renewed its master lease at Kim Heng warehouse with Kim Heng Group for another 2 years. Aggregate leverage stands at 29.1%. The most recent event was the announcement to build a BTS warehouse for DHL, consisting 2 blocks, where Block 1 comprises a three-storey ramp-up warehouse and a four-storey ancillary office, while Block 2 is a two-storey ramp-up warehouse, in Tampines. Maybank KE understood that contenders for this bid included GLCs such as the Mapletree group of companies. This new BTS is expected to account for 12% of Maybank KE’s total GAV, which is commendable. Aside, concentration risk is reduced, as CWT/C&P (sponsor), whose master leases are expiring in 2015-16 currently constitutes ~65% of portfolio GFA. Upon completion of the DHL warehouse, this is lowered to ~54%. That said, Maybank KE remains Hold with TP unchanged at $1.15, in light of oversupply of warehouse space could pt pressure on occupancy rates and industrial rents, notwithstanding industrial players adopting a cost-conscious attitude. NAV at end Mar was $0.98, translating to 0.9x P/B, with 1Q14 annualized yield at 7.4%