Cache Logistics Trust (CACHE) announced this morning that it has entered into separate sale and purchase agreements to acquire three properties in Australia. This is CACHE’s maiden entry into Australia. The total purchase consideration is A$70.0m (~S$73.4m) and would be funded wholly by debt.

On a pro forma basis, CACHE’s aggregate leverage will increase from 31.2% to 35.7%, and its DPU from 8.573 S cents to 8.71 S cents, after the completion of the acquisitions. Management believes the acquisitions would enhance the geographical diversification of the REIT and the assets are also sitting on freehold land located in close proximity to major roads linking central business districts, ports and airports.

We maintain our HOLD rating on CACHE, but our S$1.15 fair value is under review.

Source: OCBC Research - 9 Feb 2015