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10 Quick Things Investors Should Know About Cache Logistics Trust’s Latest Earnings

Last week, Cache Logistics Trust (SGX: K2LU) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Cache Logistics Trust is a REIT that focuses on logistics properties. It currently has 19 logistics warehouse properties in its portfolio which are located in Singapore, Australia, and China.

Here are 10 things investors should know about Cache Logistics Trust’s latest results:

1. Gross revenue for the reporting quarter grew 8.5% to S$29.58 million while net property income improved by 10.2% to S$23.52 million.

2. However, the REIT’s distribution per unit (DPU) was down by 9.8% year-on-year to 1.597 cents, partly due to an increase in the unit count from a rights issue. But even if the impact from right issues was excluded, Cache Logistics Trust’s DPU would still have declined by 1.1% year-on-year to 1.829 cents.

3. Based on Cache Logistics Trust’s DPU of 6.583 Singapore cents for 2017, and its closing unit price of S$0.86 as of 23 January 2018, the REIT has a trailing distribution yield of 7.7%.

4. As of 31 December 2017, the REIT’s gearing stood at 36.3%, which is a safe distance from the regulatory ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 96.6% at end-2017.

6. The weighted average lease expiry (by gross rental income) was at 3.2 years as of 31 December 2017. 61.0% of Cache Logistics Trust’s leases will expire between 2018 and 2020, 17.4% will expire in 2021 and 2022, and the rest will expire from 2023 onward.

7. In 2017, Singapore accounted for 83% of Cache Logistics Trust’s gross revenue. Australia was in second place with 16%, and China accounted for the remaining 1%.

8. There are a total of 14 properties that Cache Logistics Trust has the right of first refusal (ROFR) on. These properties belong to the REIT’s sponsor, CWT Limited, which was acquired by the Hong Kong-listed CWT International Limited (previously, HNA Holding Group) in late 2017.

9. 2017 was a busy year of deal-making for the REIT. It sold Changi Districentre 3, acquired the Spotlight warehouse in Melbourne, Australia, and announced the sale of Hi-Speed Logistics Centre.

10. Here are the comments from the REIT on its outlook:

“The Singapore industrial market continues to remain challenging due to an oversupply of warehouse space although economic indicators have improved. The vacancy rate for warehouse space in Singapore increased 0.6% points quarter-on-quarter to 12.5% in 3Q 2017, reaching the highest record since 2006 due to weak net demand. The volume of leasing transactions has nevertheless increased, and a lower decrease in rental rates is anticipated in 2018.

Looking ahead, Singapore’s economic recovery is largely supported by trade-related sectors which is likely to drive greater demand for industrial space, while supply pressure eases in 2018.

Economic conditions in Australia remain stable and public infrastructure investments continue to underpin the strong demand for industrial space. The cash rate was unchanged in December 2017 at 1.5% and GDP growth will likely average around 3% over the next few years as business conditions are positive and capacity utilisation has increased8. Over the next six months, it is anticipated that yields will remain stable with long run growth in industrial property values within the Eastern Seaboard states.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.