Cache Logistics Trust

Cache Logistics Trust is a real estate investment trust constituted on 11 February 2010. Cache was listed on the main board of SGX-ST and commenced operations on 12 April 2010. Cache principally invests in income-producing real estate used for logistics purposes in Asia-Pacific1, as well as real estate-related assets. Cache presently holds a portfolio of high quality logistics warehouse properties strategically located in established logistics clusters within Asia-Pacific.

In FY2015, Cache completed the acquisition of six properties located in Australia, completed the construction of DHL Supply Chain Advanced Regional Centre which obtained its TOP in July 2015 and the disposal of Kim Heng warehouse. Cache’s portfolio as at 31 December 2015 comprised of 19 high quality logistics warehouse properties located in Singapore, China and Australia.
Cache was listed on SGX on 12 Apr 2010 at the IPO price of .88. The dividends it has paid since 2011 are as follows:
2011 – 8.500 cents
2012 – 8.573 cents
2013 – 8.644 cents
2014 – 8.365 cents
2015 – 8.235 cents

An IPO investor would have collected 42.79 cents of dividend in the last 5 years.

Gross revenue for FY2015 increased by 8.3%, income available for distribution increased by1.6% but distribution per unit (DPU) decreased by 0.9% compared to FY2014.  4Q 2015 DPU is 2.074 cents, which is lower than 4Q 2014 DPU of 2.146 cents. 

I expect the yield for FY 2016 to drop further due to expected lower occupancy rate, lower rental rate, and higher interest rate. In the best case scenario, DPU for FY 2016 will be 2.074 cents x 4 = 8.296 cents. At today’s closing price of 84.0 cents, the yield will be 9.9%. 

If the DPU dropped by 5% in FY 2016, it will be 7.88 cents, which will translate into a yield of 9.4%.

At present, the gearing of Cache is 40.7%; hence, it will be difficult for it to make further yield accretive acquisition. If one is happy with a yield of > 9.0%, Cache is a reasonable investment at the present price of 84.0 cents, which represents a 8.7% discount to the November 2015 placement price of 94.1 cents less the 4Q DPU of 2.074 cents – [1.0 - 84.0/(94.1 – 2.074)] x 100% = 8.7%.

My average purchase price of Cache is 85.6 cents. I will continue to hold Cache for the > 9.0% of dividend yield. I will consider to add more should the price drop below 80.0 cents.