Cache Logistics Trust (CACHE) announced that the Court proceedings in relation to its 51 Alps Avenue property commenced by Schenker Singapore (end user occupying the property) are still ongoing. This arose as a result of a disagreement between Schenker Singapore and the master lessee C&P Land Pte Ltd over the anchor lease agreement (ALA).

Meanwhile, the Master Lease Agreement (MLA) has expired on 31 Aug 2016, and C&P Land has not renewed the master lease and also failed to deliver vacant possession of the property. Henceforth, in accordance with the terms of the MLA, CACHE intends to claim against C&P Land for double the amount of rent payable under the MLA for the duration of the holding over period or damages arising as a result of Schenker remaining on the property.

We expect this saga to stay protracted, but note that pursuant to the MLA, C&P Land has provided a security deposit representing 12 months of current master lease rental, and its holding company has also given a corporate guarantee on the performance of obligations of C&P Land under the MLA.

Pending more updates on this development, we maintain our BUY rating and S$0.95 fair value estimate on CACHE.  

Source: OCBC Research - 2 Sept 2016