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In a blog post dated 14 October, I said that Cambridge Industrial Trust is worth another look as I expect its income to bump up in 2012 and 2013 without any need for further fund raising. It is interesting to note that subsequently on 1 November, Templeton became a substantial unitholder. Announcement here.
More recently, the Trust has proposed the acquisition of 3C Toh Guan Road East for S$35.5m. This acquisition to be completed in the first quarter of 2012 is to be part funded by debt and the rest by cash.
The acquisition is expected to bump up annual DPU by 0.24c. If the unit price of CIT were to decline to 46c, we would be looking at a prospective annual distribution yield of 9.92%. That could be attractive enough to increase long exposure to the trust.
Is this increase in DPU sustainable? Everything else remaining equal, it is. This is because it is secured through a three years leaseback agreement to the seller of the said property.
Any potential pitfalls. I do see one which is some 10 years away. This is a 30+30 years leasehold property which saw its land lease commencing in 1991. So, it is only 10 years away before the land lease has to be renewed. At what price? We will know then. For the next few years, it should be a productive asset.
See announcement here.
Related post:
Cambridge Industrial Trust: Worth another look.
Bloggy Award
15 comments:
Hi,
The world-wide recession is approaching,and the situation in Europe is becoming worse (we are only at the beginning)
My question to this board is:
Where to put the money and if in S-Reit's, which are having the most resistance during the crisis which certainly will hit also Singapore hard
My guess: First ,PLife, FCT(suburban) Cache (special warehouses long lease)
Any opinion?
Apparently Sabana also on aquisition trail.
Hi AK71,
It seems that not many people are interested in CIT. Unfortunately i am vested @ 52.xx cents. i may buy more if the price is right for me. Meanwhile collect DPU lol.
Hi roma,
I believe that S-REITs in general have stronger balance sheets today. They are likely to weather this storm better than the last.
I have blogged about my thoughts before:
Staying positive on S-REITs.
No change to my plan as I plan changes to my life.
I like those REITs you have listed too although I might not be vested in all of them. :)
Hi Hwang,
Yes, so they are and you might remember this blog post: Sabana REIT.
Stronger than ever. :)
Hi Temperament,
Investing for income, entering at a fair price, there is little to fear.
In instances when prices weaken, I am actually elated as it means I could get more of the good stuff at lower prices and higher yields. ;)
I am looking at Sabana, Cambridge & Suntec.
Hi Marco,
Thanks for sharing your watchlist. :)
Maintained strong occupancy of 98.6% versus the industry
average of 93.8%.
• Completion of 2 acquisitions amounting to S$50.8 million
and signed option to acquire 16 Tai Seng Street amounting
to S$72.3(1) million, to be completed in two phases.
• 1Q2012 DPU increased by 17.0% to 1.171(2) cents as
compared to 1Q2011 of 1.001 cents. This signifies 4
quarters of consecutive growth in DPU.
• Distribution of capital of $0.6 million funded from the sale of
investment properties in 2010 & 2011.
Looks quite nice as well..... :)
Hi JCK,
Oh my, I actually missed out Cambridge Industrial Trust's 1Q 2012 results. So, thanks for sharing the numbers here. :)
Pleasure to help out....more info the better! :)
Hi Ak71,
I am planning to make a comeback to Cambridge and wondering why you haven't posted a review on it. :)
It is the third best DPU-paying REIT now and unlike its disappointing treatment to shareholders last year, Cambridge looks more promising this time.
Hi INVS 2.0,
Back in October last year, I said that this REIT was worth another look. I am glad it has delivered on my expectations. :)
Cambridge Industrial Trust: Worth another look.
My investment in this REIT is similar in size to my investment in Cache Logistics Trust. They are pretty small positions compared to my investments in AIMS AMP Capital Industrial REIT, Sabana REIT, First REIT and LMIR. I will keep the status quo for now.
Somehow, I missed out CIT's results. I was pretty busy for almost 2 weeks in April with some other aspects of my life and eased up on blogging...
Hi Ak71,
That's the price to pay for being a manager. Haha. :D
Well, at least you have an admirable pay every month and won't have the situation whereby you can't replenish your warchest fast enough to exploit the market due to some low pay like what I experienced with the little NS allowance several months back. :)
I am still eyeing on Sabana since AIMS and First are getting expensive now. :)
Hi INVS 2.0,
I think I am just a glorified salesman. ;p
As for pay, it is really not keeping up with inflation and definitely not keeping up with the meteoric rise in real estate prices.
More than ever, salaried men will have to be a lot more prudent with expenses and invest for higher returns these days. Everyone should start young.
My sister just asked me a few days ago which REIT should she park her money in now. She has exposure to a few REITs now but just wants the best deal to park more money in. I told her I would choose Sabana REIT. ;)
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