Cambridge Industrial Trust posts 9.2% fall in Q1 DPU

SINGAPORE - Cambridge Industrial Trust's (CIT) reported a 9.2 per cent decline in distribution per unit (DPU) to 1.112 Singapore cents for the first quarter ended March 31, 2016 from 1.225 cents in the year-ago period.

Gross revenue rose 3.2 per cent to S$28.37 million while net property income edged up 1.2 per cent to S$21.5 million but this was offset by higher expenses.

As at March 31, occupancy for CIT's portfolio comprising 193 tenants was 94.1 per cent with a weighted average lease expiry (WALE) of 3.6 years. Approximately 110,000 sq ft of space was released with a weighted positive rental reversion of 2.9 per cent. The average portfolio rental remained unchanged at S$1.27 per square foot.

Said Mr Philip Levinson, CEO of the trust's manager: "We maintained momentum in 1Q2016 despite challenging market conditions. Occupancy levels remain healthy and above industry average. Notwithstanding rental pressures ahead due to the softer economic environment, the manager is committed to executing its strategy for the year and maintaining the quality of earnings."

Looking ahead, CIT's manager said that approximately 20.2 per cent of its leases are due for renewal in FY2016, of which 13.1 per cent are for single-tenanted buildings and 7.1 per cent are for multi-tenanted buildings. CIT expects to convert one of its eight single-tenanted buildings to a multi-tenanted one. It also intends to renew or enter into new leases for four properties, deploy asset enhancements to one property, and divest two properties.

"For 2016, the manager expects the industrial leasing market to remain soft in view of the weak demand and rents to remain under pressure from increased competitions. The conversion of properties from single tenancy to multi-tenancy is also expected to continue to have a negative impact on portfolio occupancy and net property income during 2016. Hence, the manager will continue to focus on tenant retention, cost savings measures and proactive asset management,' it said.

The manager also announced on Thursday that it has entered into an agreement with Commercial and General, an Australian industrial property specialist, to explore opportunities in the Australian industrial market.

It announced previously it will be conducting a strategic review of CIT's business and operations, and had appointed Goldman Sachs (Singapore) Pte to assist it in its analysis of certain recent trends and developments in the Singapore REIT sector and the potential implications to CIT.