Luckier than ever: CIT’s DPU seen to shoot up by 12% in 2012

2012 is bound to be “one of the most exciting years” for Cambridge Industrial Trust since listing in FY06, according to an analyst.

In a statement, DMG Research said CIT’s acquisition of four properties is seen to drive its DPU up by c.12% in FY12.

The analyst noted that the rental rate of industry property will remain resilient despite a general consensus expecting a slowdown in Singapore’s economy in FY12. DMG Research backed up its forecast by the results of its sensitivity study on the industrial rental rate versus Singapore’s PMI.

“Although Singapore’s economy is expected to soften in FY12, our sensitivity study of industrial rental rates vs Singapore’s PMI demonstrated that the industrial rental rate will most likely remain flattish (assuming the global economy will not fall into another economic crisis as the one that took place in FY08) during this period,” DMG Research said.

During June and July 2011, CIT completed three acquisitions, namely, 4 & 6 Clementi Loop, 60 Tuas South Street 1, and 5 & 7 Gul Street 1.

As indicated by management, the acquisition of the 4th property at 25 Pioneer Crescent will be completed by 1Q12. These acquisitions are expected to contribute 0.2-0.3 S¢ in DPU for FY11-FY12 respectively.

Concurrently, the completion of a BTS project at Tuas by early 3Q12 is expected to bring in a high NPI yield of c.15%. while the property at 25 Pioneer Crescent is seen to bring an additional gross yield of 8% to the group.