Cambridge – DMG

Cambridge Industrial Trust 4Q11 Results Review

Full year results in-line with expectations. Cambridge Industrial Trust (CIT) released its FY11 results posting a gross revenue and distributable income of S$80.4m (+8.3% YoY) and S$50.4m (+12.7% YoY) respectively. NPI rose 6.2% to $69.1m on the back of higher rental income. DPU for the 4th quarter was reported to be 1.118 S¢ (+3.3% QoQ) bringing the entire year’s DPU to 4.237 S¢ (-13.4% YoY). The drop in DPU was mainly due to the enlargement of share base as a result of April 2011 rights issue. Separately, by completing the acquisition of 3C Toh Guan Road East, we expect the property to contribute c.0.15S¢ to FY12 DPU. Concurrently, by divesting 7 Ubi Close, CIT is able to put the acquired capital to better future investments. We maintain our BUY call with a DDM-based TP S$0.605, which posts a potential upside of c.20%.

Divestment of 7 Ubi Close. As part of the company’s efforts to recycle its capital for future investment opportunities, CIT has completed its divestment of 7 Ubi Close at S$18.7m. This price is a 2.2% premium to the latest valuation of S$18.3m as at 31st Dec 2011.We view this divestment positively as this is the only property in CIT’s portfolio which land lease is due to expire in less than 15 years.

Newly completed acquisition to begin contribution in 2Q12. CIT completed the acquisition of 3C Toh Guan Road East at S$35.5m on 30th Jan 2012. This industrial building adds another 192,864 sq ft of GFA to CIT’s portfolio and is currently leased to an anchor tenant for 3 years with an option to renew for a further 3 years. We expect this newly acquired property to contribute 0.15 S¢ to FY12 DPU.

Positive views on DPU growth in FY12. We view these results and new growth strategies positively and maintain our BUY call with a TP of S$0.605. Although CIT’s FY11 DPU has fallen by 13.4% YoY, the contribution from properties previously acquired together with these new strategies should allow CIT’s DPU to pick up in FY12.