ARA LOGOS Logistics Trust

Cache Logistics Trust has announced its maiden acquisitions; and despite having a long list of quality assets from its sponsor CWT, it choose to acquire 2 properties from 3rd parties.

Frankly I'm a little puzzled by the decision. The 2 properties that are acquired are not exactly top-rated (IMO) assets. It kinda of small actually and not particularly high yielding. I struggled to see any benefits for the acquisitions.

OK. The Penjuru property may has some redevelopment potential but the Changi property is certainly puzzling. I actually feel that the proposed acquisitions has a perceived dilutive effect on its current niche set of assets.

Summary
- Acquiring a total of approximately 232,000 gross sq.ft. of warehouse and warehouse office space
- Total purchase consideration of approximately S$39.8 million excluding acquisition costs)
- Increases assets under management to $783.9 million
- Transactions have a combined net property income (“NPI”) yield2 of approximately 8.0%
- Wholly debt-funded acquisitions where Aggregate Leverage rises from 23.7% (as at 31 December 2010) to 27.6%
- DPU accretive

Source

(Vested)

if its debt funded it should raise yield buy at least 0.5%?

I share lonewolf's opinion on this. Why not directly acquire quality assets from CWT?

It is probably that CWT is not willing to divest them to CLT, and the manager, looking for more fees, are turning to other sellers.

Seems to have programmed selling today, one lot is sold every 3 minutes. Lets see whether the seller will dump all unsold lots at pre-close.

Cache Logistics Trust marks foray into China with purchase of chemical warehouse facility for RMB 71.0 million

http://info.sgx.com/webcoranncatth.nsf/V...20032C052/$file/PressRelease-AcqnJCW.pdf?openelement

(Not Vested)

I would prefer CLT to focus more on Spore properties before venturing abroad. However what I like about this acquisition is that its a niche chemical warehouse. So if CLT continues on its current track, it has potential to be a very niche industrial REIT specialising in chemical handling and cold storage. Of cos being niche can be a double-edge sword. Your margin is probably higher but its specialise usage may be more inflexible than the generic warehouses.

(Vested)

hi lonewolf. they should probably aim for korean properties. seem high yielding.

(02-06-2011, 12:31 PM)Drizzt Wrote: hi lonewolf. they should probably aim for korean properties. seem high yielding.

Don't think CWT got any assets in Korea.

No economics of scale if portfolio is small.

Cache has nothing in Korea - except their latest asset in China, everything they have is in Singapore. I know because I was trying to help them look at assets in other Asian markets last year.... Who came up with the Korean theory? You might be very right, but I haven't heard of this. Their CEO (Dan Cerf) is a first class man. ARA has done a great job managing other REITs like Suntec as well, so hats off to Mr. Chiu.