Towards Financial Freedom
CAMBRIDGE INDUSTRIAL TRUST - New acquisition in the pipeline
Acquisition of 15 Jurong Port Road. The management of Cambridge Industrial Trust (CIT) just announced the proposed acquisition of the property at 15 Jurong Port Road for a purchase consideration of S$43.0m. 15 Jurong Port Road is a property comprises of a 2-storey ancillary office building and a newly completed 4-storey workshop and office block, with a GFA of approximately 245,172 sq ft. Subject to the completion of the acquisition, the building will be lease back to the seller of the building, HG Metal Manufacturing Limited, for a period of seven years. With an estimated net property income of S$3.6m per year, this acquisition translates to a healthy 8.4% yield annually. In addition, under the lease agreement, a step up rental of 3% in year 3, year 5 and year 7 has been incorporated. Maintain BUY on CIT with a DDM-based TP of S$0.750.
The last replacement property of the two properties to be sold to SLA. The acquisition of this property will be financed via a mixture of cash and debt from the S$100m established short term facility previously announced. Together with the previously acquisition at Marsiling and Woodlands Walk, will complete the acquisition of replacement propertied for the two properties that will be compulsory acquired by SLA during the 1Q13.
Pro-active management and extension of WALE. Although the lease on this piece of land (22.5 years) 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. Additionally, with a current plot ratio of 0.75x, as compared to the maximum allowable of 2.5x on this property, we believe there will be room for future AEIs to maximize the usage of this piece of land.
Short term impact to DPU. Going forward, together with the previous two acquisitions, we believe the additional NPI contributions will have a short term positive impact on the DPU of Cambridge Industrial Trust; until the two properties at Tuas are divested to SLA in 1Q13. We maintain our BUY call with a DDM-based (COE: 9.3%, terminal growth: 1.0%) TP of S$0.75.
The last replacement property of the two properties to be sold to SLA. The acquisition of this property will be financed via a mixture of cash and debt from the S$100m established short term facility previously announced. Together with the previously acquisition at Marsiling and Woodlands Walk, will complete the acquisition of replacement propertied for the two properties that will be compulsory acquired by SLA during the 1Q13.
Pro-active management and extension of WALE. Although the lease on this piece of land (22.5 years) 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. Additionally, with a current plot ratio of 0.75x, as compared to the maximum allowable of 2.5x on this property, we believe there will be room for future AEIs to maximize the usage of this piece of land.
Short term impact to DPU. Going forward, together with the previous two acquisitions, we believe the additional NPI contributions will have a short term positive impact on the DPU of Cambridge Industrial Trust; until the two properties at Tuas are divested to SLA in 1Q13. We maintain our BUY call with a DDM-based (COE: 9.3%, terminal growth: 1.0%) TP of S$0.75.
Source: OSK
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