CLT – OCBC

ON CLEAR GROWTH TRAJECTORY

•4Q results spot on with our estimates

•Sound fundamentals intact

•Strong position for growth

4Q11 results well within expectations.

Cache Logistics Trust (CACHE) delivered a good set of 4Q11 results, with DPU growing 8.5% YoY to 2.102 S cents. This brings the total DPU for FY11 to 8.235 S cents, implying an attractive yield of 8.3%. The strong performance was mainly attributable to a 11.8% YoY growth in NPI to S$16.0m, driven by incremental rental income from acquisitions since Mar 2011. Both the quarterly NPI and DPU were spot on with our estimates, though they were slightly ahead of the consensus numbers.

Portfolio fundamentals remain strong.

CACHE remains one of the most resilient REIT in the industrial subsector. Portfolio occupancy as at Dec 2011 was maintained at 100%, with a weighted average lease to expiry (WALE) at 4.65 years. For FY12-13, in particular, we note that less than 2% of its leases (by GFA) are due for renewal. Moreover, its master leases encompass locked-in annual rental escalation of 1.5-2% and a triple-net lease structure for the contracted lease term. This not only provides strong earnings and cash flow visibility, but also limits the downside risks from a market slowdown, in our view.

Maintain BUY.

Looking ahead, we believe CACHE will continue to perform. While its master lease arrangements may appear to limit its growth potential, we expect the REIT to continue to benefit from full-year contributions from its 2011 acquisitions. CACHE is also certainly in a comfortable position to seek growth via asset injection, with its aggregate leverage at a healthy 29.6%. We are keeping our FY12 forecasts largely unchanged for now, as the results were within our expectations. However, as we roll over our valuation to the new fiscal year, our fair value is raised to S$1.19