cquisition of 30 Teban Gardens Crescent. The management of Cambridge Industrial Trust (CIT) just announced the proposed acquisition of the property at 30 Teban Gardens Crescent for a purchase consideration of S$41.0m. 30 Teban Gardens Crescent is a
purpose built 3-storey industrial building with a single storey factory cum car showroom. Upon completion of the acquisition, the building will be let out to Eurosports Auto Pte Ltd, a representative of luxury European automotive brands such as Lamborghini and Lotus, for a
period of 6 years. Under the terms of the contract, a brand new annex block of a 2-storey showroom with ancillary office is to be built by Eurosports Auto prior to the acquisition. The gross floor area of 30 Teban Gardens Crescent is expected to be approximately 12,922
square meters upon completion of the construction works. Given a forecasted annual NPI of S$3.2m, the cap rate of this property is estimated at 7.8%. Maintain BUY on CIT with a DDM-based TP of S$0.605.

Extension of lease with the addition of a building. 30 Teban Gardens Crescent has an initial lease term of 10 years, commencing from 1 June 2007. A further lease term of 22 years will be granted by JTC on the condition that the proposed 2-storey showroom with ancillary office is constructed. As this acquisition is expected to be completed only in 4Q13, no announcement has been made with regards to the method of financing this acquisition at the moment.

Pro-active management and extension of WALE. Although the lease on this piece of land is comparatively shorter than CIT's portfolio (38 years), we view this acquisition as an effort by the manager to diversify the income stream while at the same time enlarging their tenant base. As indicated by management, with this acquisition, CIT's WALE will be extended to 3.3 years from the current 3.2 years.

Minimal impact to DPU. Upon completion of this acquisition, we believe the additional NPI contribution will have minimal impact on the DPU of Cambridge Industrial Trust. We maintain our BUY call with an unchanged DDM-based (COE:10.7%, terminal growth: 1.0%) TP of S$0.605.

Source: OSK