Tuesday, December 9, 2008

Cambridge REIT- Take Care Cos i Care

Thanks to a fellow blogger by the nick of Cheng ( you can read his blog Here) who mentioned a red flag about Cambridge in response to the analysis done by our Sexy VJC Girl. This culminated into this article . We took a look at Cambridge to see what the hoo ha ha ha ha..Santa Claus is about.

It states that they still have S$336,843,000 dollars they have to pay within a year. Wow. So, we, being extremely nosey and kaypoh like what a hot auntie would naturally be, decided to look at the footnotes to gain some perspective on this "wow" figure, and here it is:

So, really, dear investors who invested in this counter, keep your eyes peeled on any news on this. BUT, we being extremely irritating, persistent, bo liao and totally curious decided that it shan't end like that. We decided to take a look at Maple Tree Logistics which is another sort of industrial Reit. And..TAaaa DAaaaa.... No mentioning of any debt to be repaid within one year! S$113,701,000 to be repaid winthin 1 year. Compare this with Cambridge.

So can islamic financing save the day for Cambridge? ( Hmm we seem to remember some article back that Islamic financing may not be immune to the credit crisis too?........Just can't find it..)

About half and hour after we posted, Anonymous cleared some air on the financing issue. Great, thanks Anonymous. This is taken from financeasia.com. Have they signed it yet, cos its 16 days to Christmas...ho..ho..ho!

See below for a post by a nick "Banker" at a forum.
Cambridge Trust (CIT) has an option to extend the S$330+ mil facility. ABN Amro the trustee of CIT is the arranger for this facility. Moreover, this loan already has been securitized in the ABS market. In addition to the ABN Amro's backup, CIT has Australian National Bank as the major investor at the trust manager. I don't think refinancing is a problem. However, if CIT has to pay higher interest it will affect the DPU.UnquoteUpdated 11 Dec 2008: From a forummer nick "caseyc" regarding the Islamic Financing

Quote:According to the following source, it seems like Shariah-compliant loan is dead:http://www.sharesinvestment.co.../35054/en/"Refinancing will stem from conventional financing arrangements (as opposed to Shariah-compliant loan arrangements which CIT has been vying for) in the form of syndicated loan."I can't find any other references that mention this though, so take it with some salt.I've been waiting for the refinancing announcement, but decided to exit after I no longer felt comfortable with the lateness. Let's hope that they can pull through this. UnQuote

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team


  1. See this link on their financing


  2. hihi, was reading through ur valuation of REITs, ur Ascott example. I don't think it's fair for u to compare to other REITs, at least for Ascott's case, as

    1)there's no comparison other. CDL doesn't do serviced residences.

    2) even for other REITs, thr's always a difference in pricing due to several reasons, but which are mostly short-term. E.g. the red flag you have mentioned in ur analysis has actually been pointed out, by some analysts at least, and is probably why the market is discounting for it.

    I personally still find the discounted cash flow the best method to value a company. It's the most logical way to value something, not only a company, but anything else that you're investing in(and tt includes that chicken rice stall you've been eyeing at for months, and anything else)

  3. Hi Patrick,

    Similar with you, we prefer discounted cash flow too compared with for example the ratio method for comparing with other companies or comparing with Historical performance, for example, comparing the P/E, P/B e.t.c. This is because, by using the ratio analysis, when one comes to think of it, aint we actually anchoring ourselves to something when we compare between things.DCF is the most objective, though it has a lot of assumptions.

    Mmmm..did we do CDL?
    Anyways, actually..all ratios are fluff if we don't actually understand whats the real meaning why we compare...=)

  4. yeah got the same info about Cambridge Refinancing from UBS 5 dec research note on S-Reit.

    for the benefit of those who is lazy to go to the link listed above, here you go:

    Cambridge Industrial Trust (CIT)’s S$385 million three-year term loan refinancing is currently in documentation via mandated lead arranger HSBC.

    The fundraising has been well received and oversubscribed but the deal size is not increased as this is a structured, rated asset-based financing where the size is constrained by restrictions imposed by international rating agencies. The latter are expected to rate 85% of the loan facility as "AAA", and the remaining 15% "AA". Signing is expected to take place by the end of 2008 or early next quarter.

    Time to buy????

    Another candidate is Saizen...

  5. CIT managed to secure financing for 3 years (SGX website for full release)
    1) 6.6% interest per annum on loan
    2) impact -0.9 cents to distribution

    From CIT website, DPU is 6.2 cents so next years DPU will be 5.3 cents assuming zero growth. Peg it versus yield of mapletree logistics(17.6%) - and CIT price should logically be $0.30.

    Maybe sexy vjc girl can correct me if i am wrong:)

  6. Hi Testtubewasher,

    Do you mean:
    (0.053/x) = 17.67/100
    x = 0.2999

    Hmm...maybe you are anchoring.But it is the same when we do comparisons like P/E, historical ratio,P/B ratios also with other companies.

    Why not just do DCF assuming 0 growth. For the K, use an appropriate figure. We used 6% based on DBS preferential shares previously in our post, and some people commented that it is abit low as DBS is less risky.They got a point actually. So maybe you may want to add a risk premium to 6%? Was trying to google a logical risk premium to add for Cambridge but cannot find. Anyway, we then thought of using Cambridge 17% dividend yield as the k.

    So we calculated as per VJC girl, plugging into Excel the following parameters. 65 years. g=0, k =17% (See her post titled Sexy VJC girl analyses Cambrige industrial reit)

    Value = $0.31



  7. Anyway, we then thought of using Cambridge 17% dividend yield as the k. ( we mean Maple tree)

    Anyway, haha.. we are also anchoring when we compare with Maple....

  8. Hi Zhuangzi,

    Thanks for sharing =) .

  9. Hey Zhuangzi,

    Tried to leave a post on your blog again. But cannot =(. Pop up dialog box!