Cache Logistics Trust (CACHE) reported its 4Q14 results which met our expectations. Gross revenue declined 0.4% YoY to S$20.6m but DPU climbed 0.4% to 2.146 S cents. CACHE is currently undergoing a transition period as it is in the midst of converting some of its assets from master-leased properties to multi-tenanted properties. We expect some near-term pressure on its NPI margins due to expenses related to these conversions. Concerns over the oversupply situation for Singapore’s industrial space also remain as a concern. On a positive front, CACHE managed to renew the master lease of CWT Commodity Hub with its sponsor CWT. Looking ahead, CACHE will seek to pursue yield accretive acquisitions, with Australia one of its key areas of focus. We lower our FY15 DPU forecast slightly by 1.1% and introduce our FY16 projections. Rolling forward our valuations, our fair value is increased from S$1.13 to S$1.15. Maintain HOLD.
4Q14 results in-line with expectations
Cache Logistics Trust (CACHE) reported its 4Q14 results which met our expectations. Gross revenue declined 0.4% YoY to S$20.6m due to higher vacancies and tenant rent free period. Nevertheless, DPU climbed 0.4% to 2.146 S cents. For FY14, revenue rose 2.3% to S$82.9m and this formed 96.7% of our full-year forecast. Income available for distribution increased 2.0% S$66.9m, but DPU slipped 0.8% to 8.573 S cents due to a larger unit base. The latter constituted 98.7% of our FY14 projection.
Outlook remains challenging
CACHE is currently undergoing a transition period as it is in the midst of converting some of its assets from master-leased properties to multi-tenanted properties. This had some impact on its occupancy, which declined from 99.5% to 97.5%. Management will continue to step up its efforts to secure forward renewals during this conversion phase. 11% of its lettable area is up for renewal in FY15. Approximately 72% of C&P Changi Districentre and 41% of CWT Cold Hub have been pre-committed by tenants, with a strong pipeline of interest from new tenants, according to CACHE. We expect some near-term pressure on its NPI margins due to expenses related to these conversions. Concerns over the oversupply situation for Singapore’s industrial space also remain as a concern. On a positive front, CACHE managed to renew the master lease of CWT Commodity Hub with its sponsor CWT for a period of three years from Apr 2015, with an estimated initial uplift of 1% in rental rates.
Maintain HOLD
Looking ahead, CACHE will seek to pursue yield accretive acquisitions. Australia is one of its key areas of focus given the institutional-grade warehouses with good credit tenants. China has moved behind Australia in the pecking order as cap rates have narrowed. We lower our FY15 DPU forecast slightly by 1.1% and introduce our FY16 projections. Rolling forward our valuations, our fair value is increased from S$1.13 to S$1.15. Maintain HOLD.
Cache Logistics Trust (CACHE) reported its 4Q14 results which met our expectations. Gross revenue declined 0.4% YoY to S$20.6m due to higher vacancies and tenant rent free period. Nevertheless, DPU climbed 0.4% to 2.146 S cents. For FY14, revenue rose 2.3% to S$82.9m and this formed 96.7% of our full-year forecast. Income available for distribution increased 2.0% S$66.9m, but DPU slipped 0.8% to 8.573 S cents due to a larger unit base. The latter constituted 98.7% of our FY14 projection.
Outlook remains challenging
CACHE is currently undergoing a transition period as it is in the midst of converting some of its assets from master-leased properties to multi-tenanted properties. This had some impact on its occupancy, which declined from 99.5% to 97.5%. Management will continue to step up its efforts to secure forward renewals during this conversion phase. 11% of its lettable area is up for renewal in FY15. Approximately 72% of C&P Changi Districentre and 41% of CWT Cold Hub have been pre-committed by tenants, with a strong pipeline of interest from new tenants, according to CACHE. We expect some near-term pressure on its NPI margins due to expenses related to these conversions. Concerns over the oversupply situation for Singapore’s industrial space also remain as a concern. On a positive front, CACHE managed to renew the master lease of CWT Commodity Hub with its sponsor CWT for a period of three years from Apr 2015, with an estimated initial uplift of 1% in rental rates.
Maintain HOLD
Looking ahead, CACHE will seek to pursue yield accretive acquisitions. Australia is one of its key areas of focus given the institutional-grade warehouses with good credit tenants. China has moved behind Australia in the pecking order as cap rates have narrowed. We lower our FY15 DPU forecast slightly by 1.1% and introduce our FY16 projections. Rolling forward our valuations, our fair value is increased from S$1.13 to S$1.15. Maintain HOLD.
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