Following news of CWT Pte. Ltd.'s (CWT) parent's loan default, Cache Logistics Trust (CACHE) announced that CWT contributes 16.5% of its gross rental income as of mid-Apr 2019, as a tenant of CWT Commodity Hub and Pandan Logistics Hub. The weighted average lease to expiry on the CWT leases is less than one year.

CWT has yet to default on its rental payments and there are currently no arrears for the two leases. The REIT also currently holds a security deposit that averages around three months. In addition, there are underlying end-users for the leases, which CACHE can engage directly.

While we believe that some of these factors mitigate the risk involved, we note that exposure to the CWT is sizeable. We place our Hold rating and fair value of S$0.76 for CACHE under review pending further details.

Source: OCBC Research - 17 Apr 2019