Cache Logistics Trust reported Friday its third quarter net property income fell 8.3 percent on-year to S$21.14 million, partly due to lower revenue and higher expenses from converting the Cache Gul LogisCentre to a multi-tenancy structure from a master lease in April.
The REIT also pointed to “transitory downtime between replacement tenants in Commodity Hub, lease expiries at certain properties, absence of contribution from the divested Jinshan Chemical Warehouse and a weaker Australian dollar. This was partially offset by rental contribution from the warehouse in Altona, Victoria, Australia that was acquired in April 2019.”
Gross revenue for the quarter ended 30 September declined 12 percent on-year to S$27.72 million, the REIT said in a filing to SGX.
The distribution per unit (DPU) for the quarter came in at 1.313 Singapore cents, with 1.263 Singapore cents from operations and 0.05 Singapore cent from capital, the filing said. That was down 11 percent from a DPU 1.475 Singapore cents in the year-ago quarter, the REIT said.
The portfolio’s committed occupancy rose to 94.0 percent for the third quarter, up from 90 percent in the second quarter, after the signing of 1.3 million square feet of new leases and renewals this year, the trust said.
“We are pleased with the improvement in portfolio committed occupancy to 94.0 percent. Signing of 1.3 million square feet of leases year-to-date is no easy task,” Daniel Cerf, CEO of the REIT’s manager, said in the statement.
“This is testament to our proactive asset management efforts to maintain high portfolio occupancy in a challenging business environment. We continue to be very focused and committed in our strategy to driving organic growth and operational efficiencies while identifying suitable opportunities to further unlock and build portfolio value,” Cerf added.
For the nine-month period, Cache Logistics Trust reported net property income of S$65.36 million, down 3.2 percent on-year, on gross revenue of S$86.35 million, down 4.6 percent on-year. The DPU for the nine-month period was 4.147 Singapore cents, down 5.8 percent from 4.401 Singapore cents in the year-ago period, the filing said.
In its outlook, Cache Logistics Trust pointed to an October Colliers report projecting rentals for Singapore logistics assets would remain subdued amid the “volatile global trade situation” and economic slowdown, offset by a smaller supply pipeline for logistics space, which should help stabilize vacancies.
In Australia, the trust cited Reserve Bank of Australia’s expectations growth would remain underpinned, in part, by low interest rates and infrastructure spending.
“Australia’s industrial sector continues to see growth and is the best performing sector in the property market. The strong demand in 2018 and low vacancy has translated into higher supply in the first half of 2019 as tenants saw challenges in finding existing spaces that can meet their needs,” the trust said, citing a report from m3property Insight.