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Cambridge Industrial Trust: 1Q 2011 results.

Thursday, April 28, 2011

I must say that Mr. Chris Calvert, CEO of Cambridge Industrial Trust, has not failed suspicions that he could underdeliver. He did so and did so stupendously.

DPU declared for 1Q 2011 is 1.001c (XD 5 May 2011). This is to be paid on 14 June 2011. Annualised DPU is provided by the management as 4.06c. This is much lower than the DPU of 4.84c, post rights, as suggested by the manager. I blogged about the tricky nature of the rights issue and DPU forecast in an earlier blog post. Read it here.

At today's closing price of 51c, the annualised DPU of 4.06c would mean a distribution yield of only 7.96%. This is greatly disappointing! Has Mr. Chris Calvert outdone himself? A rhetorical question.

Property manager's fees increased a whopping 46.4% while manager's management fees increased 8% year on year. All these while the gross revenue of the REIT increased only 3.8% year on year.

Regular readers know that I do not have a high opinion of Mr. Chris Calvert and I have blogged about how the Trust has failed to deliver in the past. An example? Please read blog post here. However, I decided to be friends with Cambridge Industrial Trust again (read blog post here) and it seems that I could have been too forgiving.

Given a chance for a small gain, I would probably divest my smallish investment in this Trust. Yes, the consolation is that my investment in this Trust is a very small one. Perhaps, a wary subconscious prevented me from foolishly investing too much in this Trust.

With gearing at 33.3%, an interest cover ratio of only 4.8x and a distribution yield of less than 8%, I am better off investing in Cache Logistics Trust, AIMS AMP Capital Industrial REIT and Sabana REIT. All of these have lower gearing, higher interest cover ratios and higher distribution yields. Cambridge Industrial Trust is a loser.

See manager's report here.
See presentation slides here.


betterplan said...

Hi AK,

Perhaps you have missed out this.$file/11403GXCIT25TaiSengAcquisitionUpdate.pdf?openelement

Doesnt give investors good feelings. Lets see what else can go wrong, and more importantly learn to be mindful of such in future.


AK71 said...

Hi Wee,

Indeed, it does leave much to be desired. I am absolutely disappointed.

Thank you for sharing the link. :)

OT83 said...

Hi AK,

It is indeed very disappointing when I see the results. I am aiming to divest too.

AK71 said...

Hi OT,

Chris Calvert has failed me too many times starting from his days as CEO of MI-REIT. No more.

OT83 said...


LMIR this time perform good. I will continue to keep this. What would be a good price to sell CIT? Your TA is much better than mine :)

AK71 said...

Hi OT,

LMIR is my third largest investment. No intention of divesting further. :)

As for CIT, let's see if I could divest at 52c. I am not really thinking of making much out of this. I just wanna close a chapter.

today is a present said...

Chris Calvert .... typical of 'foreign talents' ability?

So typical....


AK71 said...

Hi NS,

I know how Chris Calvert was responsible for creating the problems at MI-REIT and how he lost some of CIT's money in his crazy attempt to take over MI-REIT later on. This guy should be in the entertainment business.

I would not tar all FTs with the same brush though. ;)

Anonymous said...

Did the latest quarter include the rental income from the proposed acquisition ?


AK71 said...

Hi Nick,

Apparently, a proposed acquisition of 25 Tai Seng Avenue dated 20 Jan did not materialise.

Furthermore, it is not known if the acquisition of Potential Property 1 and Potential Property 2 is going well. These two properties were partly why a rights issue took place.

The acquisition of 4&6 Clementi Loop, the 3rd property for which proceeds from the recent rights issue were earmarked for will be completed only in 2Q 2011.

What I find galling is the fact that distributable income actually reduced quarter on quarter despite gross revenue going up a tad in the same period.

A reduction in DPU is probably a given with the recent rights issue but I did not expect the distributable income to reduce as well.

Hwang said...

chris calvert the joker? i have since started to believe it!

time to divest after a year.

AK71 said...

Hi Hwang,

Of course, CIT could improve its performance once its proposed acquisitions start contributing to total distributable income. This is assuming that the proposed acquisitions would be successfully carried out.

We could possibly see CIT's unit price go as low as 49c per unit next week. So, if one has a longer term horizon and believe that the management would be able to deliver on the promised DPU of 4.84c for 2011, then, accumulating on weakness could be considered.

However, I believe that a bird in hand is worth two in the bushes. So, I will stick to CLT, AA REIT and Sabana REIT for now. ;-)

Musicwhiz said...

I agree that investing is often-times about the Management Team as much as it is about the numbers. If someone has shown that they cannot deliver time and again, then it's best not to trust that person again.

Fool me once, shame on you. Fool me twice, shame on me!

Have a great weekend!


AK71 said...

Hi MW,

Sounds like the lyrics from a song I have heard before. Am I right? ;)

Good advice, I feel. :)

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