We visited six of CREIT’s industrial properties recently, accompanied by members of its asset and property management teams, followed by a meeting with its new CEO, Mr Chris Calvert.

Concerns we have include the fact that only 30% of its master tenants are endusers of its industrial space and CREIT’s heavy reliance on its top 10 tenants for its gross revenue.

Short-term performance looks stable. We take comfort that management is managing its tenants and sub-tenants much more tightly, and taking steps to ensure tenant sustainability. Limited lease expiries of only 5.4% over the next four years add some certainty to occupancy sustainability.

Maintain Outperform at S$0.53. Although there remain issues in CREIT’s portfolio, we are fairly confident that CREIT is not likely to face too much distress in the short to medium term. At 0.37x P/BV, CREIT remains more attractive than its two larger competitors AREIT (0.79x) and MLT (0.52x). Potential price upside of 89% and above-average yields of 17.5% make CREIT attractive despite uncertainties in the manufacturing sector. We maintain our Outperform and target price of S$0.53 (discount 9.6%), still based on DDM valuation.