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Cache Logistics Trust: 2Q 2011.

Thursday, July 28, 2011

The decision to use funds from the partial divestment of Saizen REIT to invest in Cache Logistics Trust at the right prices a few months ago continues to be rewarding.

The management has declared a DPU of 2.086c for 2Q 2011 which is much higher than the DPU of 1.71c the same quarter last year in 2010. At the high of 99c/unit hit this morning, the REIT had an annualised distribution yield of 8.43%. Income distribution will go XD on 2 August and is payable on 29 August.

Current gearing level is 29.1% and this will increase to 30.2% upon completion of acquisition of a warehouse facility in Loyang belonging to Air Market Express. This acquisition is expected to contribute 0.05c in DPU in time.

I also like how its cost of borrowing has come down with its all in interest cost now at 3.92% compared to 4.37% in the last quarter. This contributes to a higher level of distributable income.

Some other numbers:
NAV/unit: 88c.
Interest cover ratio: 9.2x

Interest cover ratio came down from 9.5x in the last quarter. This suggests that interest expense in dollar terms has gone up faster than net property income (NPI). However, at 9.2x, it is still much healthier compared to AIMS AMP Capital Industrial REIT, Cambridge Industrial Trust or even Sabana REIT. So, I am not unduly worried. Just have to keep an eye on things, as always.

See announcement here.
See presentation slides here.

Related post:
Cache Logistics Trust: 1Q 2011.


Drizzt said...

cache log is showing that ARA is only interested in increasing asset size. cost of debt came down due to more leverage thats all.

AK71 said...

Hi Drizzt,

I am not sure that it is accurate to say that they are only interested in increasing asset size.

If they do not maintain or improve DPU in the process of doing so, the market will not stand for it. ;)

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