©2019 by reitscompass

Cache Logistics Trust’s DPU Falls 8.4%



Key Highlights:

  • Cache Logistics Trust (SGX: K2LU)'s 4Q19 DPU dropped 8.4%

  • The annualised yield and price to book ratio are 7.5% and 1.29 respectively


1. Dividends


Net property income fell 12.4% to $20.5m. The poor performance was mainly due to:

  • The conversion of Cache Gul LogisCentre master lease into multi-tenancies

  • Downtime at Commodity Hub due to the transition period

  • Lower signing rents

  • Divestment of Jishan Chemical Warehouse

  • Weaker AUD


The annualised yield is 7.5%. Both the stock price and DPUs of the REIT has been declining since 2012. In the last quarter, we mentioned that Cache Logistics Trust's DPU is not sustainable, the REIT suffers negative rental reversion of 11.9%. The good news this quarter is that the REIT managed to fetch positive 9.1% rental reversion.

Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy grew slightly to 95.3%, with 20.2% of net lettable area is up for renewal this year! The portfolio leverage also went up to 40.1%. The interest cost is 3.84%.


It is currently trading at a price to book ratio of 1.29.



3. Growth Catalyst


Moving forward, the industrial segment in Singapore is likely to remain flat. However, its Australia industrial space should continue to grow, mainly driven by e-commerce segment.

The recent collaboration between its manager, ARA and LOGOS to create a world-class logistics and real estate development platform in Asia-Pacific would help to bring in a strong pipeline to Cache Logistics Trust. Besides, under the arrangement, ARA will also transfer its entire holdings in the REIT and the manager to LOGOS.


Summary


While the REIT has been improving its fundamentals, the declining DPU over the years is our main concern on the REIT's performance. Thus, it does not match our criteria to be included in our REIT portfolio.



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