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Cache Logistics Trust: 3Q 2011.

Saturday, October 29, 2011

A DPU of 2.095c has been declared and this is an 8% increase year on year. Annualised at 8.38c, it would translate to a distribution yield of 8.38% at the last traded price of $1 per unit. Not bad. That would explain the strength of the unit price in the days running up to the announcement.


Occupancy: 100%.
Gearing: 30.4%.
Interest cover ratio: 8.3x.
Total assets: >$830m.
Financing cost reduced from 3.92% to 3.81%.

It would be a natural course for Cache Logistics Trust to eventually have total AUM of $1b. With gearing at 30.4%, it could borrow another $150m easily before hitting the 40% mark as it embarks on acquisitions to hit the $1b AUM mark.


The REIT might not have to do any equity fund raising at all. This would be good for unitholders since all acquisitions in such an instance would be distribution yield accretive, all else remaining equal.

A good set of numbers and I will look out for opportunities to accumulate more units of this REIT on pullbacks.


Technically, when a REIT goes XD, we usually see a pullback in its unit price. We have seen it with AIMS AMP Capital Industrial REIT, Sabana REIT, Cambridge Industrial Trust and First REIT recently.

I have identified the supports for Cache Logistics Trust where it could be more rewarding to enter long positions at. Now, I wait. Wait to receive income for my current investment. Wait for weakness to accumulate more.

See presentation slides: here.

Related post:
Cache Logistics Trust: Initiated long position at 91.5c.

15 comments:

Roma said...

Hi,

I am Peter.
I agree with you about Cache.
I am holding already some positions but looking for a new entry point.
In the last week I used as a new entry piont the exD day to buy more First and Sabana.
The same strategy I will follow with Cache

AK71 said...

Hi Peter,

A sound strategy, I believe. Of course, it is always hard to say how much of a pull back we will see. Good luck to us both. :)

Ah John said...

Hi Peter, "In the last week I used as a new entry piont the exD day to buy more First and Sabana", what's the reason behind?

Ah John said...

when a REIT goes XD, the pullback is because asset is reduced. So the price pullback doesnt mean more value, right?

Ah John said...

Cache price more than nav, not a good buy?

AK71 said...

Hi Ah John,

The pull back is very often more than the asset reduction's value. I notice that this could initially be marginal but could widen. That is when I would buy more. :)

AK71 said...

... As for Cache Logistics' unit price being above NAV/unit, I was somewhat uncomfortable with this which is why I only initiated a long position at 91.5c/unit some time back.

However, rationalising that we are investing for income, as long as the REIT is able to generate the type of distribution yield we are looking for at a moderate gearing level, this is acceptable. After all, "blue chip" REITs are mostly trading above their NAV. ;)

In an earlier blog post, I said that there is greater safety in this REIT's numbers and I am willing to accept a lower distribution yield because of this as well. :)

Gregg said...

Hi Peter and AK, yes, I also noticed that REIT price tends to pull back when come to Xd,managed to bought FR last Friday @0.785..

roma said...

Hi Ah John,

I agree with AK71 that Cache is a good buy now also the price is above NAV.
But this is not important which counts for me are:
1. They have a Triple Net Lease (NNN) which requires that the tenant has to pay all insurance, maintenance, and taxes.

2.A multi tenancy lease structure

3. An average high lease expiry of almost 5 years.
Which lowers the risk if trouble will come from Europe

4. The high DPU yield of 8.2%

5. Healthy level of gearing

FoodieFC said...

I am waiting for Cache to have correction.
too high (good) to be true.

Paul said...

I love Cache and rate it highly.

It has a good sponser (CWT), a good manager (ARA) and most important of it, niche assets.

How many cold storage and specialised chemical storage facilities are there in Spore?

How many are listed as a REIT on SGX?

For its niche assets, I think its slight NAV premium (compared to A-REIT) are not totally unjustifiable.

(Vested)

AK71 said...

Hi Paul,

Yes, I agree that paying a slight premium for Cache Logistics Trust is acceptable and that explains my initial long position in the REIT at 91.5c/unit.

I will wait for a more opportune time to increase my long exposure to this REIT. :)

Ah John said...

Hi Roma, thanks for sharing, the 3rd point is quite attractive to me: "3. An average high lease expiry of almost 5 years.
Which lowers the risk if trouble will come from Europe".

Btw, I would like to wait for a while, Because if look at the price chart, I think soon we can get 0.95.

Ray said...

Hi AK71, stumbled across your blog yesterday and spent the whole night combing through many of your old posts including how you just wanna share your ideas with everyone. I commend your big heart and wanna congrtulate you on a very high passive income generating portfolio :) your blog is wonderful too but understand you won't be blogging as often which is quite a loss for noobs like me. Keep up the good work! :)

AK71 said...

Hi Ray,

The primary objective of my blog is really just to share my little big ideas with anyone who might be interested. So, I am happy that you have found my blog to be interesting and useful. :)

Yes, I am blogging less and less. In fact, I took the last few days off from blogging and did not even look at the stock market. Quite refreshing. ;p

As and when I have the time and inclination, I will blog. So, do come by periodically. :)

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