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Cache Logistics Trust: Acquisitions.

Monday, March 14, 2011

Cache Logistics Trust is making its maiden acquisitions.

"The two unrelated transactions were signed with APC Distributors Pte Ltd (“APC”) for the acquisition of 6 Changi North Way for a purchase price of S$30.9 million and with Kim Heng Tubulars Pte Ltd (“Kim Heng”) for the acquisition of 4 Penjuru Lane for S$8.9 million."

Some important numbers:

1. Both acquisitions are expected to be accretive to Cache’s distribution per unit. The combined NPI yield is expected to be 8.0% which compares favourably to the NPI yield of 7.7% for the existing portfolio of Cache as at 31 December 2010.

2. Both acquisitions will be fully-funded by debt. The aggregate leverage of Cache will increase from 23.7% (as at 31 December 2010) to 27.6% as a result of the acquisitions.

Read press release here.

I remain interested in initiating a long position in this trust.


WK said...

did they mention how many cents the acquisition will be contributing?

AK71 said...

Hi WK,

I cannot find any information on this. Going by the NPI yield. It could be a marginal increase in DPU of a few percentage points. Perhaps, 4 or 5%.

Paul said...

I find it strange that CLT is acquiring properties from unrelated 3rd party when there is a long line of quality assets from sponsor CWT that can be injected.

The 2 properties that are acquired are not exactly top-rated (IMO) assets. It kinda of small actually and not particularly high yielding. I struggled to see any benefits for the acquisitions.

OK. The Penjuru property may has some redevelopment potential but the Changi property is certainly puzzling. I actually feel that the proposed acquisitions has a perceived dilutive effect on its current niche set of assets.

So I can only reach 2 conclusions:

#1 CWT despite granting the trust ROFR has no intention of divesting some of its assets.

#2 The trust manager are just acquiring the properties to earn the acquisitions fees.


CECiL said...

Hi AK,

I have been following your blog for quite some time. Wonder if you can help me understand the between Cache and AIMS, which one is better and why? Thanks a lot!

AK71 said...

Hi Paul,

Your concerns are not without reason. Have you thought of writing in to the managers of Cache Logistics Trust? That could throw some light on the points you raised. ;)

The acquisitions are, however, NPI yield and distribution yield accretive which are two important considerations for any REIT. :)

AK71 said...

Hi Cecil,

Your comment brings back memories of my days as a student. Sounds like an essay question. Hahaha.. :)

At the end of each blog post, you would find a word "LABELS". This is after the time the blog post was put up. Now, if you clicked on "CLT" in this current blog post, you would find all the blog posts I have ever written on Cache Logistics Trust.

Similarly, if you clicked on a blog post on AIMS AMP Capital Industrial REIT, you would find "LABELS" and if you clicked on the label "AIMS AMP Capital Industrial REIT", you would find all the blog posts I have ever written on this REIT.

Compare the information I have shared and you make a decision for yourself. I cannot provide advisory. Of course, please read the disclaimer at the bottom of my blog page too. Good luck. :)

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