One of Cache Logistics Trust's maiden acquisition in Australia, 16-28 Transport Drive, Melbourne, Victoria.One of Cache Logistics Trust's maiden acquisition in Australia, 16-28 Transport Drive, Melbourne, Victoria.

Singapore-listed industrial REIT Cache Logistics Trust (SGX:K2LU) announced on 9 February that it will be making its first property acquisitions in Australia with the impending purchase of three distribution warehouses for AUD70 million (SGD73.4 million).

The properties are namely 127 Orchard Road located in Chester Hill, New South Wales, 16-28 Transport Drive in Somerton, Victoria and 51 Musgrave Road in Coopers Plains, Queensland.

The warehouses are being acquired from Australian companies McPhee Development Pty Ltd, Larapinta Logistics Pty Ltd and Sonton Pty Ltd. McPhee Distribution Services will leaseback an initial 60.6% of the total lettable area of the properties from the date of closing, increasing to 83.2% from April 2018 with fixed annual rental escalations of between 3-3.5%.

Management the REIT have described the maiden Australian venture as a demonstration of the REIT’s commitment to growing accretively in a prudent manner. “The addition of three quality distribution warehouses on freehold land will not only strengthen the portfolio, but also provide income and geographical diversification”, said Daniel Cerf, CEO of Cache Logistics Trust’s manager.

The properties have a combined weighted average lease expiry (WALE) of 9.7 years, increasing the REIT’s portfolio WALE from 4.1 years to 4.6 years.

Cache Logistics Trust has indicated that the acquisitions will be debt-funded from a combination of existing and new debt facilities, increasing the REIT’s leverage ratio from 31.2% to 35.7%. Approximately 65% of the total acquisitions cost will be funded via AUD facilities to hedge against currency risks.

Units of Cache Logistics Trust are currently listed on the Singapore Exchange at SGD1.17.

One of Cache Logistics Trust's maiden acquisition in Australia, 16-28 Transport Drive, Melbourne, Victoria.
One of Cache Logistics Trust's maiden acquisition in Australia, 16-28 Transport Drive, Melbourne, Victoria.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.