Cache Logistics Trust: Initiated long position at 91.5c.

"I said in an earlier blog post that I am willing to pay a small premium above NAV which is acceptable for a lower risk investment. So, if a retest of the low of May 2010 at 91.5c were to happen, I could buy some units." This was what I said in my blog on 8 March, a few days before the terrible disaster hit Japan. Today, I bought some units of CLT at 91.5c.

With the acquisitions the manager announced yesterday, this REIT is looking more attractive as its gearing level remains under 30% while its DPU could bump up by a few percentage points. Could its unit price weaken further? It could as its downtrend is technically very much intact.

Well, 91.5c/unit was my target entry price and, I dare say, is a fairly good one with a smallish 3.98% premium to NAV/unit which is at 88c. I have gotten my foot in the door, so to speak.

I have a few more blog posts which I would like to put up this evening but it really depends on my condition later on. My second hot yoga session is in less than an hour!

Related post:
Cache Logistics Trust: Why not buy at 94.5c?
Cache Logistics Trust: Acquisitions.

Cache Logistics Trust rated 'buy' by OCBC. Initiate buy on CLT with a fair value of $1.03 largely on valuation grounds.
Tuesday, 15 March 2011

© 2011 - The Edge Singapore

Cache Logistics Trust: Acquisitions.

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.

Saizen REIT: Staying calm and rational.

Many would like to know what am I doing next with regards to Saizen REIT. I have replied to readers in this blog and in emails that I am holding my position and waiting for more announcements from the managers.

I would stay calm and think through the situation rationally, knowing the current financial strength of the REIT as well as the possible maximum loss of NAV and income it could suffer if all possibly affected buildings were destroyed. I hope I have done a good job so far. Indeed, I have been sharing my findings and thoughts here in my blog.

It has now been confirmed that, of the 14 buildings visited, all are still standing and have only suffered minor damages. There are also no casualties amongst the tenants. So, the loss of NAV and income which could be suffered is much reduced now. Consequently, any probable negative impact on income distribution to unitholders is reduced. There are 14 more buildings to be visited in Sendai and we will have to await the next report from the REIT's managers.

Technically, price action today formed a white hammer after a gap down to 13.5c with an intra-day low of 13c, a price last seen on 9 Nov 2009.

In my blog post this morning, I mentioned that the selling is overdone and that panic was in the air. I stand firm by my statement. In the following days, we could see the gap covered and we could see the former support at 15c providing resistance. Now, for anyone looking to reduce exposure, that would be a fairly good time to do so.

Do I think that major investors are abandoning the REIT? I do not think so. Saizen REIT has more than a billion units in issue. The total trading volume for today, although higher than usual, is only under 14 million units.

A total of 7,954 lots were bought up today with 4,010 lots bought up at 14c alone. This compared to a total of 5,723 lots sold down today. Total buying up numbers trumped selling down numbers. It is my guess that many investors recognise that the REIT is very undervalued and could be using this opportunity to accumulate at even lower prices. If the unit price were to weaken further, I would buy more.

Saizen REIT: Divestment of Wealth Meinohama.

Saizen REIT divested another property, Wealth Meinohama, which is located in Fukuoka, from the property portfolio of YK Shingen. It was built in December 1998 and comprises 12 residential units and 1 parking lot.

The property was sold to an independent private investor for a cash consideration of JPY 59,500,000 (S$0.9 million).  This was at a 3.1% premium to the property's valuation of JPY 57.7 million.

"The proceeds from the Current Divestment will be deployed towards Saizen REIT’s working capital until such time when they are required for other purposes, including the refinancing of the loan of YK Shintoku (if such refinancing is possible)."  Read announcement here.