Cambridge – DMG

Compulsory acquisition of land

The news: CIT has received formal notice from the Singapore Land Authority (SLA) on 11 Jan 2011 with regards to the compulsory acquisition of land in Tuas area (western part of Singapore) for the construction of the Tuas West Mass Rapid Transit extension and road works. All or part of the land where these properties are situated will be possessed by the Government by January 2013.

Our thoughts: Based on the company’s initial assessment, three of CIT’s 43 properties will be affected to varying degrees by this land acquisition: (i) 1 Tuas Ave 3 – likely to be wholly acquired, but management feels minimal impact as CIT has two years to work with tenant to look for an alternative site or possibly develop a facility for CWT, so loss of NPI may not materialise at all. (ii) 30 Tuas Road – only entrance expected to be impacted, likely truncated (iii) 120 Pioneer Road – least impact, grass patch in front of building. As management will be meeting up with the authorities in the next two weeks, management should have more details by release of its 4Q10 results on 11 Feb. Maintain BUY, with TP of S$0.61.