Secured three-year S$390.1m syndicated term loan from HSBC, NationalAustralia Bank, and Royal Bank of Scotland. Share price to rebound as majorrisk hampering the stock is removed.

Cambridge Industrial Trust (CIT) has agreed the terms of commitmentdocuments with three banks for a three-year S$390.1m syndicated term loan,which will fully refinance all existing debt facilities. The three leadarrangers for the syndicated loan are HSBC, nabCapital, a division ofNational Australia Bank, and Royal Bank of Scotland.

Management expects the syndicated loan to be drawn down in Jan 09.Refinancing issue is resolved, thus removing a major risk hampering thestock. Share price likely to experience significant rebound.

Interest cost, inclusive of interest rate hedging cost, is 4.9%. Theeffective all-in interest rate for the syndicated loan is 6.6% p.a., afterincluding amortisation of upfront transaction costs. This is higher thancost of 5.0% assumed in our earnings model. However, the amortisation oftransaction costs does not affect DPU.

We have revised our forecast to factor in the higher cost of borrowings. Weexpect occupancy to taper off to a lower 93% by 2Q09, compared to ourprevious assumption of 96%. We cut our FY09 DPU forecast by 14.3% from 5.1cents to 4.2 cents.

Recent correction in CIT's share price is over blown. CIT provides FY09distribution yield of 21.5% and trades at 74.3% discount to NAV/share ofS$0.76. Its share price has also corrected 80.1% from the peak of S$0.98 inmid-07 and is trading at 71.3% below the price of S$0.68 during the initialpublic offering in Jul 06.

Reiterate BUY recommendation with new target of S$0.62, based on atwo-stage dividend discount model (required rate of return: 9.0%, growth:2.5%).