Towards Financial Freedom
Cache Logistics Trust - Bracing For Headwinds Ahead
Cache's 4Q14/FY14 results were in line with DPU changing +0.4%/-0.8% YoY to 2.146/8.573 cents, meeting 24.5%/97.4% of our full-year forecast. Reiterate NEUTRAL with a DDM-derived TP of SGD1.21 (CoE: 7.7%, TG: 0%), implying 8.6% total return upside. The supply dynamics for warehouse spaces in Singapore remain unfavourable as additional stocks could put pressure on rental fees and occupancy rates. Also Singapore's PMI of 49.6 in December was the lowest since Feb 2013.
4Q14/FY14 results in line. Cache Logistics Trust's (Cache) 4Q14/FY14 revenue changed -0.4%/+2.3% YoY to SGD20.6m/SGD82.9m. The yearly increase was driven by rental escalation and the acquisition of Precise Two last April. 4Q14/FY14 distributable income increased 1.0%/2.0% YoY to SGD16.8m/SGD66.9m. Weighted average lease term to expiry of the portfolio is 4.1 years (3Q14: 3.6 years), with 27% of the leases due to expire in 2015-2016. The all-in-financing cost for FY14
averaged 3.30% (FY13: 3.48%), with 61.7% of total debt hedged. Gearing stood at 34.9% (3Q14: 35.0%)
Portfolio occupancy dips. Cache's portfolio average occupancy rate dipped modestly to 97.9% from 99.5% in 3Q14. For leases expiring in 2015, Cache has retained 60% of its current end-users in addition to signing on new tenants. It has also successfully renewed the master lease at CWT Commodity Hub with CWT Limited for anot her three years beyond the Apr 2015 expiry. Its build-to-suit development project, DHL Supply Chain Advanced Regional Center (DSC ARC), is now two-thirdsinto completion, and is on track to be completed in 2H15.
No refinancing required for the next two years. The Trust has refinanced SGD375m loan facilities with a SGD400m club loan comprising: i) 4-year term loan facility of SGD185m, ii) 5-year term loan facility of SGD150m, and iii) 4-year revolving credit facility of SGD65m. This extends its weighted average debt maturity to 4.1 years from 1.6 years.
Bleak outlook for warehouse spaces. We are cautious on the impending amount of new industrial warehouse spaces that could put pressure on industrial rents and occupancy rates. Some properties in Cache's portfolio were already revalued downwards YoY in FY14. Reiterate NEUTRAL with an unchanged TP of SGD1.21.
Source: OSK-DMG
4Q14/FY14 results in line. Cache Logistics Trust's (Cache) 4Q14/FY14 revenue changed -0.4%/+2.3% YoY to SGD20.6m/SGD82.9m. The yearly increase was driven by rental escalation and the acquisition of Precise Two last April. 4Q14/FY14 distributable income increased 1.0%/2.0% YoY to SGD16.8m/SGD66.9m. Weighted average lease term to expiry of the portfolio is 4.1 years (3Q14: 3.6 years), with 27% of the leases due to expire in 2015-2016. The all-in-financing cost for FY14
averaged 3.30% (FY13: 3.48%), with 61.7% of total debt hedged. Gearing stood at 34.9% (3Q14: 35.0%)
Portfolio occupancy dips. Cache's portfolio average occupancy rate dipped modestly to 97.9% from 99.5% in 3Q14. For leases expiring in 2015, Cache has retained 60% of its current end-users in addition to signing on new tenants. It has also successfully renewed the master lease at CWT Commodity Hub with CWT Limited for anot her three years beyond the Apr 2015 expiry. Its build-to-suit development project, DHL Supply Chain Advanced Regional Center (DSC ARC), is now two-thirdsinto completion, and is on track to be completed in 2H15.
No refinancing required for the next two years. The Trust has refinanced SGD375m loan facilities with a SGD400m club loan comprising: i) 4-year term loan facility of SGD185m, ii) 5-year term loan facility of SGD150m, and iii) 4-year revolving credit facility of SGD65m. This extends its weighted average debt maturity to 4.1 years from 1.6 years.
Bleak outlook for warehouse spaces. We are cautious on the impending amount of new industrial warehouse spaces that could put pressure on industrial rents and occupancy rates. Some properties in Cache's portfolio were already revalued downwards YoY in FY14. Reiterate NEUTRAL with an unchanged TP of SGD1.21.
Source: OSK-DMGRelated Stocks
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