Cache Logistics Trust Handles Its Way to Higher Distributions for the Year

Cache Logistics Trust (SGX: K2LU) is a Real Estate Investment Trust focusing on logistical properties in Singapore and China. It currently has 12 industrial properties in Singapore and 1 warehouse in Shanghai.

Cache Logistics is sponsored by CWT (SGX: C14), the largest logistics company in Singapore. The REIT’s managed by ARA-CWT Trust Management, a joint venture between real estate fund management outfit Ara Asset Management (SGX: D1R) and CWT.

Most of Cache Logistics’ properties are single-tenanted. This might create a certain level of consistency and predictability for its rental income.

Current gross floor area has increased to 5.1million sqft and all the 13 properties are collectively valued at S$1.04b. The REIT’s properties are very new, with an average age of only 5.8 years. At the moment, the end users of the properties are mostly from the industrial and consumer goods sector.

Cache Logistics released its full-year earnings on Tuesday and saw annual revenue improve by 11.4% from S$72.6m to S$80.9m. Combined with much lower interest costs, the REIT’s operating income before fair value gain increased by 43%.

Distribution per unit for the year also increased by 3.3% to 8.64 Cents. At its current price of S$1.12 a unit, that is a yield of roughly 7.8%. During the year, the trust also strengthened its balance sheet by lowering its gearing ratio (total debt over total assets) from 31.2% to 28.8%.

Furthermore, Cache Logistics has a pipeline of properties that it can acquire as it has the “Rights of First Refusal” on some of its parents’ (CWT) properties. There are 14 properties, located in Singapore, Malaysia and China from CWT that can potentially add another 4.7million sqft to Cache Logistics’ total gross floor area.

There’s a caveat though. In order to grow through acquisitions, Cache Logistics might need to raise more equity from time to time resulting in potential dilution for existing owners; from past records, the REIT had raised S$59m in 2012 and another S$86.8 m last year in private placements.

Cache Logistics Trust is one of the few industrial REITs listed on the Singapore Exchange. Other REITs that have a focus on industrial properties here in Singapore include Ascendas REIT (SGX: A17U), Mapletree Logistics Trust (SGX: ME8U)Sabana REIT (SGX: M1GU) and Soilbuild Business Space REIT (SGX: SV3U).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.