Cambridge – Phillip

We met up with management recently for an update on the investment portfolio as well as the plans going forward.

Investment portfolio. CIT’s portfolio has grown from 27 properties worth $531.0 million at the time of IPO to 40 properties with an asset value of $862.7 million currently. The properties are located in Singapore and are spread across a diversified range of sub-sectors. All the properties enjoy 100% occupancies with a WALE of 7.0 years based on FY07 gross revenue. As at 30 Oct 2007, CIT has signed $94.0 million worth of MOUs.

Equity fund raising (EFR). CIT completed its first EFR in October, succesfully raising $193.9 million. 277 million units were placed out to institutional investors. Gearing currently stands at 38%. CIT is able to gear up to 60% according to the property funds guideline. However most REITs tend to bring down their gearing once they hit the 45%-50% range.

Acquisitions. CIT remains focused on the local industrial market in the near term, and highlights that there are still approximately 96.0 million sqf of investment grade stock in the market. However management has hinted possible in-road into the Malaysian or Chinese markets. Although being independent in status and lacking a developer sponsor, CIT maintains a strategic partnership with CWT Limited and Mitsui & Co. through a joint investment in CITM, the Manager of CIT. Thus CIT will be able to leverage on its partners’ strength.

Valuation. We project FY08 DPU of 5.94 cents and based on the closing price of $0.685, this translates to a yield of 8.67%. Our projections are conservative and we have not factored in contributions from further acquisitions. Therefore we believe that accretive acquisitions carried out in the coming periods will drive the dividend payout even higher. The high yield alone is compelling enough to warrant our attention. Maintain BUY.