- 2Q14/1H14 results in line with our and consensus forecasts.
- Working with the sponsor to transform to a more multi-tenanted property portfolio over time.
- No changes to our DPU forecasts and TP. Reiterate HOLD with a DDM-derived TP of SGD1.23.
CACHE’s 1H14 revenue grew 4.8% YoY to SGD41.5m, driven by positive rental reversions and the acquisition of Precise Two last April. 1H14 distributable income rose 2.9% YoY to SGD33.4m. Weighted average lease term to expiry of the portfolio is 3.8 years, with 52% of the leases (previously: 56%) due to expire in 2015-2016 (including the new DHL build-to-suit warehouse at Tampines LogisPark). The all-in-financing cost for 2Q14 averaged 3.47% (1Q14: 3.48%) with debt maturity of 1.4 years (1Q14: 1.6 years).
Making progress with sponsor’s master leases
CACHE is working with the sponsor to transform to a more multi-tenanted property portfolio over time. The sponsor, CWT/C&P, is expected to gradually wind down its master lease positions. The REIT manager will then work with the CWT/C&P to secure existing and new end-users to lease premises directly from CACHE.
In 2Q14, CACHE has forward renewed ~4% of the portfolio GFA expiring in 2015 to 2018 and beyond. This bodes well for the remaining 52% of portfolio GFA expiring in 2015-16, the majority of which are master leases with the sponsor.
We remain cautious of the impending amount of new industrial warehouse space that could put pressure on industrial rents and occupancy rates. Maintain HOLD with an unchanged DDM-derived TP of SGD1.23 (cost of equity = 7.2%; Tg = 0%).
No comments:
Post a Comment