Cache Logistics Trust’s Latest Result: Higher Revenue but Lower Distribution Per Unit

Last Friday, Cache Logistics Trust (SGX: K2LU) released its 2018 fourth-quarter earnings update. Cache Logistics Trust is a real estate investment trust (REIT) that focuses on logistics properties. It currently has 26 logistics warehouse properties in its portfolio that 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 4.8% to S$31.0 million, while net property income fell by 0.6% to S$23.4 million.
  2. The REIT’s distribution per unit (DPU) was down by 5.9% year over year to 1.502 cents, mainly due to lower income for distribution and a higher number of units in issue.
  3. Based on Cache Logistics Trust’s full-year DPU of 5.903 Singapore cents and its unit price of S$0.74 (as of writing), the REIT has a trailing distribution yield of 8.0%.
  4. As of 31 December 2018, the REIT’s gearing stood at 36.2%, which is a good distance from the regulatory ceiling of 45%.
  5. The REIT’s portfolio had a committed occupancy rate of 95% at the end of the quarter.
  6. The weighted average lease expiry (by gross rental income) was at 3.1 years as of 31 December 2018. Overall, 76.5% of Cache Logistics Trust’s leases will expire within the next five years, while the rest will expire after 2024.
  7. For this quarter, Singapore accounted for 76% of Cache Logistics Trust’s gross revenue. Australia was in second place with 23%, and China accounted for the remaining 1%.
  8. There are a total of 14 properties on which Cache Logistics Trust has the right of first refusal (ROFR) to acquire. 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. Cache Logistics Trust divested Jinshan Chemical Warehouse in Shanghai for RMB87.0 million.
  10. Cache Logistics Trust provided the following outlook guidance:

“The global economy remains uncertain as rising trade tensions and geopolitics continue to weigh in. Singapore’s economy grew slower at 2.2% on a year-on-year basis in 4Q2018 due to a softening manufacturing sector. JTC’s rental indices showed a continuing rental decline for single-user factory and warehouse space, although the rate of decrease has moderated. Industrial factory and warehouse rents are forecasted to change -0.5% to +0.5% in 2019. In Australia, the economy is performing well, although GDP growth is forecasted to average around 3.5% in 2018 and 2019 before slowing in 2020 due to a forecasted slower growth in resource exports.

Looking ahead, the Manager will continue to pursue opportunities for strategic acquisitions and asset enhancements to strengthen its portfolio and grow earnings over time.”

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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.