Cache Logistics Trust (CACHE) announced yesterday that it is acquiring a portfolio of nine warehouses in Australia for A$177.6m (approx.

S$188.3m). These freehold logistics assets have a WALE of 5.0 years and a strong occupancy of 98.1%. In terms of organic growth, the portfolio has an in-built rental escalation of between 2.0% and 3.5%.

The initial net property yield is 6.4%, which is above the 5.5% rate offered by the S$100m perpetual securities issue on 25 Jan 2018. Legal completion is expected by end Feb 2018. Aggregate leverage will increase from 36.3% to 39.3% post acquisition. On a pro forma basis, FY17 DPU would have increased by 1% to 6.822 S cents.

We are positive on the acquisition, given the improved profile of the portfolio. Pending further details, we place our Hold rating and fair value of S$0.81 under review.

Source: OCBC Research - 1 Feb 2018