Cache Logistics Trust (CACHE) posted results that were below expectations. 2Q19 gross revenue decreased 7.4% YoY to S$27.8m, mainly due to the 1) the conversion from a master lease to a multitenancy lease structure at Precise Two, 2) absence of contribution from 40 Alps Ave and Jinshan Chemical Warehouse, and 3) transitory downtime between replacement tenants at Commodity Hub. This was partially offset by the contribution from an Australian warehouse acquired in Apr 2019.

2Q19 DPU dropped 6.9% YoY to 1.321 S cents, which we consider to be below expectations. The drop in DPU was mainly due to lower NPI and a one-off reversal of professional fees associated with the 51 Alps Ave’s legal proceedings in 2Q18.

We maintain HOLD but place our fair value of S$0.74 under review.

Source: OCBC Research - 25 Jul 2019