MENU

Cambridge Industrial Trust Has A Yield Of Over 8%: 4 Useful Things Investors Should Know About Its Business

Cambridge Industrial Trust (SGX: J91U) is one of a handful of real estate investment trusts in Singapore that have a distribution yield of over 8% at the moment.

Here are four useful things investors should know about the trust’s business:

1. Property portfolio

Cambridge Industrial Trust owns a portfolio of 50 properties right now.

These properties are located across Singapore and range from logistics, warehousing, light industrial, general industrial, a car showroom and a workshop, to a business park. They are are also located close to major transportation hubs and key industrial zones in Singapore.

2. Business performance thus far in 2016

The table below shows Cambridge Industrial Trust’s business performance in the first nine months of 2016:

cambridge-industrial-trust-revenue-and-profit-table
Source: Cambridge Industrial Trust 2016 third-quarter earnings presentation

We can see that other than a marginal increase in gross revenue, all the other metrics – such as net property income, the amount available for distribution, and the distribution per unit – have all fallen.

3. Tenant base

It is important that a trust does not depend too heavily on any particular trade sector for its rental income so as to prevent high concentration risk.

cambridge-industrial-trust-trade-sector-breakdown
Source: Cambridge Industrial Trust 2016 third-quarter earnings presentation

In Cambridge Industrial Trust’s case, no single trade sector currently accounts for more than 13.2% of the REIT’s rental income, as you can see from the chart above.

That being said, the trust is still exposed to concentration risk since all its assets belong to the industrial property sector. Its fortunes would thus be tied to the ebb and flow of the industrial property sector in Singapore.

4. Occupancy rate

The occupancy rate for a REIT is an important metric to look at since it gauges the strength of the market demand for the REIT’s properties.

As of 30 September 2016, Cambridge Industrial Trust’s overall portfolio occupancy level is at 93.6%. This is higher compared to other Singapore-focused industrial REITs such as AIMS AMP Capital Industrial REIT (SGX: O5RU), which currently has an occupancy rate of 92.7%. It is also higher than the industrial average occupancy rate of 89%.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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