Cambridge – Phillip

Acquires 2 properties

• Acquires 2 properties for $37.1 million.

• Private placement to raise gross proceeds of $40.0 million

• Maintain hold and fair value of $0.52

Acquisition

Cambridge announced the acquisition of 2 properties at a consideration of $37.1 million. The purchase is at a slight discount to the appraised value of $37.2 million. The property located at 22 Chin Bee Drive has a lease term of 7 years and the initial yield is 9.0%, and there is a rent escalation component of 5% on the 3rd, 5th and 7th year. The property located at 1&2 Changi North St 2 has a lease term of 7 years with an option to renew of another 7 years and the initial yield is 8.01% with annual rent escalation of 1.5%. The total acquisition cost is approximately $37.7 million and will be partly funded with $24.7 million from the private placement proceeds and the remaining $13 million through debt.

Private placement

The private placement consists of 83,683,000 new units which will be placed out to two groups of investor. The first group consists of institutional and other investors and the new units are priced at an issue price $0.478. The second group consists of the Oxley Group and Mitsui & Co Ltd and the new units are prices at $0.503. The private placement is fully underwritten and will raise gross proceeds of $40.0 million and net proceeds of $37.6 million. Part of the net proceeds is used to fund the acquisition while the remaining proceeds will be used for future acquisitions.

Gearing

Gearing is expected to reduce from 42.3% to 41.5% post the acquisition. The REIT will also be repaying $32 million of the existing loan from the divestment proceeds and gearing is expected to further reduce to 39.5%. In relation to the acquisition, Cambridge has secured a $50 million term loan facility and a $20 million revolving credit facility on a 3 year tenor. The term loan facility has an all-in 3.05% interest cost and $13 million will be drawn down to part finance the acquisition.

Advance distribution

Due to the issuance of new units, Cambridge will pay out advance distribution to existing unitholders prior to the issuance of the new units. Management guided the advance payout to be between 0.6 to 0.7 cents. We estimate this to be 0.674 cents and 3Q10 DPU inclusive of the advance distribution to be 1.169 cents.