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Hold. While yields of >8.0% are attractive, we believe that top line will remain under pressure in the near term given the competitive industrial leasing environment.
ALP REIT INVESTMENT CLUB
Cambridge Industrial Trust (J91U)
(24 July 2016) close price: S$0.56
12M-Target price: S$0.55
Distribution Yield: 8.44%
1.) Type of Reit: Industrial REIT
2.) Number of property in the portfolio: 51 properties
3.) Countries that the business operates in: Singapore only
4.) Top 5 properties that generates the highest revenue (Decreasing order):
24 Jurong Port Road (Singapore) contributes 6.86%
3 Pioneer Sector 3 (Singapore) contributes 6.77%
30 Toh Guan Road (Singapore) contributes 5.26%
4/6 Clementi Loop (Singapore) contributes 4.90%
16 Tai Seng Street (Singapore) contributes 4.90%
5.) Weighted average lease expiry (WALE) profile: The weighted average lease expiry (“WALE”) remains healthy at 3.8 years.
6.) Debt maturity profile:
7.) Challenges: With possible economic restructuring and changes of government policies in the near future, leasing and acquisitions in Singapore’s industrial sector is likely to be difficult.
In addition, a deterioration in the economic outlook could have a negative impact on industrial rents and occupancies as companies cut back production and require less space. Industrial rents have a strong correlation with GDP growth.
8.) Strengths: Resilient financial performance due to Distribution Reinvestment Plan, allowing for good asset and capital management. Diversified tenant mix, hence reduced reliance on any single tenant.
9.) Significant events: Newly appointed Chief Operating Officer and Chief Financial Officer in 2016.
11.) Recommendation: Hold. While yields of >8.0% are attractive, we believe that top line will remain under pressure in the near term given the competitive industrial leasing environment.
COMPILED BY: Belle Teo (Follow me on Facebook)
DISCLAIMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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