S-REIT Investment Blog: Analysis of Cambridge (After Sale of Lam Soom Industrial Building)

Welcome

Welcome to my investment blog where I share with you my analysis of REITs in Singapore.

I hope that my investment philosophy will bring me a steady stream of income apart from my job. I am aiming for at least $3,000 per month which can sustain the current expenses of myself and my family.

Do enjoy reading my blog and post any comments that you have. I welcome them because it is a time to learn from each other.

When I am looking at investing in REIT, here are some of the guidelines that I am looking at. Feel free to comment on it. I am willing to listen to ideas.

-> at least 8% yield.
-> Price that is lower than its NAV.
-> Low gearing (if possible)
-> High secured NAV.

Current Dividend income is $3,800/month.

Thursday, July 11, 2013

Analysis of Cambridge (After Sale of Lam Soom Industrial Building)

Current Price on 10th July 2013 = $0.715

Current Yield = 6.90%
Price-to-book Ratio = 1.05
Assets per unit = $0.951
Debt per unit = $0.27 (including current liabilities)
Gearing = 28.4%
Secured NAV = $0.044 (6.15%)

Cambridge Industrial Trust have announced recently of their divestment of Lam Soon Industrial Building for $140 million which is above their valuation of $110 million. In their report, it is likely that it will be used to repay debts which turn out to be yield-accretive.

I was a bit disappointed that the en-bloc sale of this building did not go through because they have a pretty high reserve price which I thought they will persevere through to extract the maximum value for unitholders like us. To me, a catalyst for upgrade of their NAV and secured NAV has disappeared.

With the sale, they have no other visible catalyst. The statistics that we see above is likely to stay like this for a while. It also mean to me that it has lost its attractiveness.

I do hold a significant amount of shares in Cambridge and will source for another REIT to maximise the yield of my portfolio.