Tuesday, January 28, 2014

Cambridge Industrial Trust - Growing Steadily (DBSV)

Cambridge Industrial Trust
HOLD S$0.70
STI : 3,147.33
Price Target : 12-Month S$ 0.74
Growing Steadily

• DPU of 1.251 Scts in line with expectations
• Acquisitions and developments to fuel growth in 2014/2015
• HOLD, TP S$0.74

DPU of 1.251 Scts is in line with our expectations, bringing full year DPU to 4.976 Scts (+ 4% y-o-y). In 4Q13, topline and net property income was 3.1% and 8.7% lower y-o-y, mainly due to the impact of divestments (four properties but mainly 63 Hillview) which was partly mitigated by the contribution from the acquisition of four properties and development/asset enhancement projects (88 Int'l Rd and 4/6 Clementi Loop) in 1H13, supported by escalations in rent for selected properties. Portfolio occupancy remained stable at c.97%. Distributable income in 4Q13 rose by 3.8% y-o-y to S$15.5m (including S$1.2m capital distribution), translating to a DPU of 1.251 Scts.

NAV increased by 7.4% to S$0.695. Portfolio valuations remained stable, with the weighted average cap rate at 6.8%. The uplift in NAV mainly came from the divestment gain from 63 Hillview.

Our View
Announced acquisitions to contribute to earnings. Apart from organic growth through expected positive rental reversions through renewing close to 17% of its leases, where a number of masterleased properties are expected to roll off. Underlying occupancies are understood to be fairly high, limiting downside to earnings. We expect further uplift from the acquisitions of 11 Chang Charn Road (purchased at S$32m) and 30 Teban Gardens (S$41m w/o land premium) in 1Q14. In addition, ongoing capex of c.S$58m at 21B Senoko Loop and 3 Pioneer Sector 3 will be completed progressively over FY14. We estimate gearing to increase slightly to 32% (within management’s target of < 35%).

Uplift from refinanced loans in 2014. Management has hedged 83% of their debts into fixed rates over the next two years, mitigating the impact on any risk of rising interest rates in the immediate term. Interest savings through the re-financing of its interest rate swaps will see its average cost of debt decline to 3.6% (vs 3.9% currently) from 2H13.

HOLD, TP S$0.74. Our estimates are adjusted slightly to account for the enlarged share base owing to its ongoing dividend reinvestment scheme. CREIT continues to offer steady, resilient yields of 7.3%- 7.7%. Our HOLD Call and DCF-based TP of S$0.74 is maintained, given limited upside.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 20/01/14

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