Tuesday, September 27, 2016

Cache Logistics Trust

Cache Logistics Trust (S$0.920) Temporary lease arrangement to Schenker may hurt DPU
- Cache agreed to a holding arrangement with Schenker, while the legal dispute between itself, C&P and Schenker is on-going
- This entitles Cache to receive rental at a below market rate of $0.77 psf/month for the Schenker Megahub
- A related scenario study back in May ‘16 estimates that Cache's proforma 1Q16 DPU would drop by 7.3% to 1.89¢.
- Extrapolating the impact, the industrial landlord's 2Q16 annualised distribution may slip to 7.9% from 8.6%.
- Cache's 13% surge from a low in Jun has driven up its price to meet the consensus TP of $0.92 (5 Buy, 4 Hold)
- Viva Industrial Trust (>9% fwd yield) could be an alternative for industrial REIT exposure. Resides in Market Insight Yield Porfolio

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