http://sgxreports.blogspot.sg/2012/06/cache-logistics-trust.html

A pre-emptive cash call. Being one of the lower geared SREITs, we see Cache Logistics Trust’s (Cache) recent placement exercise as a pre-emptive move to leverage on potential growth opportunities. The placement was well received by investors, netting proceeds of S$57.1m (after related expenses), which will be utilized towards funding a previously announced acquisition and repayment of debt. Gearing post placement is expected to head down towards c.27% (from 29% previously).

Slight initial dilution due to negative funding gap. With new funds raised at an estimated 8.5%, but being deployed to (i) purchase a lower yielding asset (21 Changi North Way is estimated to generate an initial yield of 7.7%) and (ii) repayment of debt costing 4.3%, we forecast that this negative funding gap could lead to a dilution of c.3% in FY12-13F earnings/DPU. However, investors appear to focus on Cache’s lower gearing of 27% and potential acquisitions that Cache could execute given a larger implied debt-funded headroom of close to S$120m (till 35%).

Acquisitions may be on the cards. An update with management reiterates our view that Cache is poised to continue its growth trajectory in the medium term, with the manager sourcing regionally for acquisitions. Near term, the manager is keen to grow its Singapore based portfolio. Apart from third party assets, we believe that Cache could tap sponsors, CWT and C& P’s available pipeline of warehouses to grow its AUM. As such, we have raised our acquisition assumptions to S$60m (nil previously), resulting in slight adjustments to our FY12-13F.

Maintain BUY, TP adjusted slightly to S$1.11. We believe that timely execution of acquisitions is key to limit unitholder dilution due to an enlarged share base. Maintain BUY, stock continues to offer attractive prospective yields of 8.6-8.8%.

Do you have a link to the report?  CIMB published a report on 29 Oct 2010, rating Cache as Outperform with target price of $1.30.  Did they change their position so soon? 

Go read this DBS coverage:

https://www.dbsvresearch.com/Research/dbs/research.nsf/(vwAllDocs)/97DE8F63759027DA4825773E00054895/$FILE/singdaily090610.pdf

Quarterly payouts is based on 3-6-9-12; yield at current price ($0.95-0.99) should be about 7-8% based om IPO prospectus forecast.