Cambridge Ind Trust Results Announcement

Written By Stock Fanatic on Friday, January 17, 2014

  CIT's 4Q13 revenue and NPI growth came in at -3.1% yoy and +1.8% yoy respectively. These results translate into 24% and 25% of our respective 4QFY13 estimates. Together with the previous 9M earnings, full-year revenue and DPU were in line with our expectations, meeting 98% and 99% of our respective FY13 estimates. 

Given another proactive year ahead (in terms of managing and repositioning its portfolio) coupled with interest savings and a strong balance sheet, we maintain our Add call with an unchanged DDM-based target price (discount rate: 8.2%) of S$0.80.

A respectable set of results amid a tough year 

Cambridge Industrial Trust (CIT) just announced its 4Q13 results with revenue and DPU being reported at S$23.3m (-3.1% yoy) and 1.25S¢ (+1.8% yoy) respectively. In FY13, gross revenue increased by 8.4% to S$96.5m while NPI rose to S$80.4m (+5.5%). During the said period, CIT completed four acquisitions totalling S$92.7m, commenced two AEIs totalling S$58.2m ? both on track for completion in 4Q14 ? and divested three non-core assets totalling S$45.4m. Occupancy for its portfolio remained high at c.97%.

Defensive balance sheet

During 4Q13, CIT entered into S$250m of interest-rate swaps to fixed interest rates, with all-in cost reduced to 3.6% per year (from 3.9%) and 83% of debt under a fixed rate for the next two years. Through this exercise, we expect CIT to save c.S$7m in interest over FY14. CIT has a healthy balance sheet currently, with a leverage ratio of 28.7% and no major refinancing due till Jun 2016.

Technical Analysis

Daily Chart

Strong REIT but slight concern with change of CEO

In our view, through proactive management of both assets and capital, CIT has become a stronger REIT and is well positioned for any acquisition opportunities. In addition, with limited refinancing needs in 2015 (S$50m), CIT is well shielded from any potential rise in interest rates over the next two years. Looking ahead, we expect CIT to divest a further 2-3 non-core assets while, at the same time, completing two more acquisitions and two AEIs. 

However, the resignation of the CEO, Mr Chris Calvert (without a clear successor), may put short-term pressure on the share price as the market awaits further information. Maintain Add. (Read Report)

 

 

NOTICE OF BOOKS CLOSURE AND DISTRIBUTION PAYMENT DATE

NOTICE IS HEREBY GIVEN that the Transfer Books and Register of Unitholders of Cambridge Industrial Trust (" CIT" ) will be closed at 5.00 pm on 27 January 2014 for the purpose of determining Unitholders? entitlements to CIT?s distribution.

CITM has announced a distribution of 1.251 cents per unit for Cambridge units for the period 1 October 2013 to 31 December 2013 comprising distributions from the following:

(a) Taxable income - 1.147 cents per unit

(b) Tax-exempt income - 0.004 cents per unit

(c) Capital gains - 0.100 cents per unit

Unitholders whose securities accounts with The Central Depository (Pte) Limited are credited with CIT units as at 5.00 pm on 27 January 2014 will be entitled to the distributions that will be paid on 28 February 2014.

 

 



CIT?s Full Year 2013 Distribution Per Unit Grows 4.0% year-on-year

 







 Acquisition of 11 Chang Charn Road for S$32.0 million to be completed in 1Q2014

 

 



 Completed four acquisitions in FY2013, totalling S$92.7 million



 

 Entered into interest rate swaps, reducing all-in cost to 3.6%1 p.a. from June 2014 onwards

 

 



 Gearing ratio of 28.7% with 83% of our debt fixed for the next two years

 

 

Cambridge Industrial Trust: Enters into S$250m rate

swaps ahead of Fed taper.

Cambridge Industrial Trust's (CIT) rate swaps

will extend the maturity of its fixed rate debt from 0.8 years to 2.3 years, as at end-Sep

13, on a historical pro forma basis. With the swaps in place, 86% of CIT's debt will be

maintained as fixed-rate debt. The rate swaps will also cut its debt cost from 3.9% to

3.6% from June 14. (Source: The Business Times)

 

 

It?s all about debt

Proactive capital and risk management has allowed CIT to be in a stronger position than before. Given its robust balance sheet,we believe CIT is wellpositioned to make acquisitions when the opportunity arises while continuingto grow through AEIs.

3Q13 results were largely in line with our and consensus estimates. 3Q13 DPU accounted for 24% of our FY13 forecast, with 9M13 DPU meeting 72%. We tweak our model to account for the slightly weaker than expected results and roll over our valuations to FY15. In view of the strong balance sheet, we upgrade our rating from Neutral to Outperform with a higher DDM-based (discount rate: 8.3%) target price of S$0.79.

Proactive management

3Q13 DPU was up 3.9% yoy, mainly the result of additional rental income contribution from the four acquisitions completed earlier this year. During this quarter, portfolio occupancy remained high at 97%. Recently, CIT refinanced S$250m of debt facilities maturing in 1H14 and, in the process, lowered the trust?s borrowing cost to c.3.9%. During this process, S$81.3m from the proceeds from various divested properties, including 63 Hillview Avenue, was used to retire part of the S$208m term loan due in 1H14 while the remaining S$100m was refinanced to June 2016. By doing so, CIT?s gearing was reduced to a healthy 27.9% (vs. 35.8% in 2Q13) with no refinancing needs till 2015.

Capital efficiently used

By retiring some of its debt, we estimate CIT saves c.S$3.3m p.a. in terms of interest expenses. Interestingly, this is more yield-enhancing than owning 63 Hillview, which was only giving a yield of 2.3% vs. the all-in interest cost of c.4.0% CIT was paying. All-in interest cost post re-financing is reduced to 3.9%.

Upgrade to Outperform

Although the acquisition market remains challenging, we believe a strong balance sheet will allow CIT to be well positioned to make any acquisitions/AEIs when opportunity knocks. In addition, the long debt expiry profile, together with c.86% of debt under a fixed rate, will allow it to weather any hikes in interest rates.

 

CIMB

Cambridge Industrial Trust - It?s all about debt

Written By Stock Fanatic on Friday, November 1, 2013

Proactive capital and risk management has allowed CIT to be in a stronger position than before. Given its robust balance sheet, we believe CIT is well positioned to make acquisitions when the opportunity arises while continuing to grow through AEIs.

3Q13 results were largely in line with our and consensus estimates. 3Q13 DPU accounted for 24% of our FY13 forecast, with 9M13 DPU meeting 72%. We tweak our model to account for the slightly weaker than expected results and roll over our valuations to FY15. In view of the strong balance sheet, we upgrade our rating from Neutral to Outperform with a higher DDM-based (discount rate: 8.3%) target price of S$0.79.

Proactive management

3Q13 DPU was up 3.9% yoy, mainly the result of additional rental income contribution from the four acquisitions completed earlier this year. During this quarter, portfolio occupancy remained high at 97%. Recently, CIT refinanced S$250m of debt facilities maturing in 1H14 and, in the process, lowered the trust?s borrowing cost to c.3.9%. During this process, S$81.3m from the proceeds from various divested properties, including 63 Hillview Avenue, was used to retire part of the S$208m term loan due in 1H14 while the remaining S$100m was refinanced to June 2016. 

By doing so, CIT?s gearing was reduced to a healthy 27.9% (vs. 35.8% in 2Q13) with no refinancing needs till 2015.

Capital efficiently used

By retiring some of its debt, we estimate CIT saves c.S$3.3m p.a. in terms of interest expenses. Interestingly, this is more yieldenhancing than owning 63 Hillview, which was only giving a yield of 2.3% vs. the all-in interest cost of c.4.0% CIT was paying. All-in interest cost post re-financing is reduced to 3.9%.

Technical Analysis

Daily Chart

Upgrade to Outperform

Although the acquisition market remains challenging, we believe a strong balance sheet will allow CIT to be well positioned to make any acquisitions/AEIs when opportunity knocks. In addition, the long debt expiry profile, together with c.86% of debt under a fixed rate, will allow it to weather any hikes in interest rates. (Read Report)