MI-REIT – Phillip

MI-REIT announces its third acquisition since IPO, bringing its total value of announced acquisitions to $126.1 million.

MI-REIT completed the acquisition of 541 Yishun Industrial Park A on 4th Oct 2007. The property will be leased back to the tenant for a 12 year lease term with a built-in rental escalation structure. With an acquisition target of $500 million annually, we believe there will be more annoucements coming up.

About the properties. The latest acquisition improves the lease expiry profile as well as the diversification of the property portfolio. WALE will improve from a pre-acquisition of 6.3 years to 7.06 years post-acquisitions. The acquisitions will be fully funded by debt. Gearing post-acquisitions of 7 Clementi Loop and 541 Yishun Industrial Park A will increase to 16%. With
a gearing limit of 60% and a further $159 million of corporate debt facility, MI-REIT still has much debt room for further acquisitions.

Valuation. We revise our revenue to factor in the contributions from the latest acquisition. Our forecasted DPU increases to 7.48 cents for FY08 and 7.96 cents for FY09, translating to a yield of 6.33% and 6.74%. Our fair value remains at $1.39, derived from our DCF model. Reiterate Buy.