Key Points
- Cache is acquiring a chemical warehouse facility in Shanghai from CWT Limited (“CWT”) via an acquisition and leaseback arrangement.
- This acquisition marks Cache’s entry into China.
- The property is located in Jinshan District within the successful Shanghai Chemical Industrial Park (“SCIP”), one of the largest petrochemical bases in Asia.
- Cache’s newly purchased facility is sited on a land area of 33,506 square metres, with a built-up gross floor area of about 13,547 square metres.
- CWT is the Sponsor of Cache and the CWT properties in Asia-Pacific fall under the right of first refusal granted to Cache at the time of the IPO in April 2010.
- This transaction marks the first successful acquisition of a CWT asset since the IPO.
- The consideration paid for the property is RMB 71.0 million (or approximately S$13.5 million).
- CWT will leaseback the facility for a period of three years with an option for a further three years.
- The net property income yield of 8.6% is higher than the Cache present portfolio of 7.6%.
- The average of the two valuations provided by CB Richard Ellis and Knight Frank Petty, who acted on behalf of the Manager and the Trustee respectively, is RMB 76.6 million (or approximately S$14.6 million).
- The acquisition is accretive at the distribution level, with the annualised pro forma financial effect on Cache’s DPU for FY2011 expected to be an additional 0.03 cents per unit after applicable taxes in China, and offers the potential for future capital appreciation.
- The transaction also allows investors to gain exposure to a segment of the market which they may not be able to do so efficiently.
- Post-completion, Cache’s leverage will rise from 27.9% to 29.2%.
This is the second acquisition by CacheLog since its IPO, and a first from its sponsor CWT. It is also the first overseas acquisition.
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