What Investors Need to Know About Cache Logistics Trust’s Latest Earnings

Cache Logistics Trust (SGX: K2LU) is a real estate investment trust (REIT) that owns 19 logistics warehouse assets located in established logistics clusters in Singapore, Australia and China. As at 31 December 2017, the REIT’s portfolio had a total gross floor area of around 7.6 million square feet and a value of about S$1.2 billion.

Yesterday, Cache Logistics Trust announced its financial results for the full year ended 31 December 2017 (FY2017). Here are 10 things investors should know from the earnings announcement:

1. Gross revenue for FY2017 inched up by 0.6% year-on-year to slightly under S$112 million. This was largely due to the rental top-up at 51 Alps Ave and higher contribution from the Australia assets, DHL Supply Chain Advanced Regional Centre and Cache Cold Centre, partially offset by the fall in revenue from the divestment of Changi Districentre 3 and lower contribution from Changi Districentre 2.

2. However, net property income (NPI) fell slightly by 0.8% to S$87.3 million, mainly on the back of “conversion from a triple-net master lease in a soft rental market for 40 Alps Ave and 51 Alps Ave”.

3. Income available for distribution slumped 4.8% to S$66 million.

4. Distribution per unit tumbled 10.9%, from 7.391 cents last year to 6.583 cents in FY2017.

5. As at 31 December 2017, the net asset value per unit stood at S$0.716, down from S$0.78 seen at the end of 2016. The fall was due to a higher number of units outstanding after a rights issue in October 2017.

6. By using the proceeds from the rights issue to repay borrowings, the REIT’s gearing ratio fell from 43.1% last year to 36.3% at the end of FY2017.

7. The weighted average debt maturity was at two years, with the average all-in financing cost at 3.56%, as at 31 December 2017. A year back, the figures were at 2.8 years and 3.60% respectively.

8. The overall portfolio occupancy came in at 96.6%, and the weighted average lease to expiry by net lettable area was 3.4 years.

9. Cache will be divesting its Hi-Speed Logistics Centre located at 40 Alps Ave in Singapore for S$73.8 million. The sale price is about 7% higher than its valuation as at 31 December 2017. The REIT’s manager “intends to utilise the proceeds to reduce debt and reinvest the capital into higher value-adding assets to generate sustainable earnings”.

10. With regards to the dispute surrounding the lease at 51 Alps Ave, a peaceful settlement was reached with the REIT receiving market rental for the property during the holding arrangement period (from 1 September 2016 to 31 December 2017) and under a new lease with Schenker. Schenker will continue to fully-occupy the property until August 2021.

As at the time of writing, Cache Logistics Trust is selling at S$0.87 per unit. This translates to a price-to-book ratio of 1.2 and a distribution yield of 7.6%.

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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 Sudhan P doesn’t own shares in any companies mentioned.