Listed in Singapore, CapitalMall Trust is the city-state’s oldest REIT.  Since its initial public offering on July 17, 2002, CapitalMall Trust has gained a cumulative 132% in U.S. dollars, or 121% in Singapore dollars. Over the same period, the Strait Times Composite has rallied 67% in U.S. dollars.

CapitalMall Trust is literally Singapore’s REIT benchmark.  The company was the first REIT to become publicly-traded four years ago and holds a first-class portfolio of shopping malls throughout the city-state.

Revenue is mainly derived from rental income received from a diverse range of over 1,000 leases in five major shopping malls in both suburban and city areas.  Occupancy rates average over 98.5% for CapitalMall Trust, operating 60% of its malls outside the core Orchard Road shopping district, where rents are high compared to malls located in the suburbs.  The scope for raising rental income continues to grow outside the Orchard Road area, a margin-booster for CapitalMalls Trust.  That adds significant shareholder value because during the Asian economic crisis in 1997-1998, Orchard Road rental incomes plunged 50% while malls in the suburbs saw a much smaller 5% decline.

On July 21, CapitalMall Trust reported another stellar earnings report. Net income surged 29.2% in the second quarter versus Q2 2005 while the unit holders’ distributable income grew 26.1% versus a year earlier.  Cash-flow also improved, rising 14%.

As Singapore’s economy continues to expand, the real estate market should also strengthen. But the extra kicker for shareholders is a combination of rising distributions over the next 12-24 months and a rising Singapore dollar versus the U.S. dollar.

Currently, CapitalMalls Trust yields an effective 5.18% in Singapore dollars - a strong currency not only in Asia but also against the U.S. dollar.  It’s no secret that the United States and the European Union (EU) continue to put pressure on Asian countries to revalue their cheap currencies - including Singapore.  Along with China and several other countries in the region, Singapore continues to harbor an undervalued currency vis-à-vis the U.S. dollar and the euro.  I expect the Singapore dollar to remain strong over the next five years while the American dollar suffers another bear market against most world currencies.

Rising Payout, Fat Dividends
In 2006, CapitalMalls Trust raised its annual distribution by 10.2% compared to 2005’s payout.  Based on the current share price, the company now pays S$0.11 cents per share annually or 5.18%.

The average dividend yield of Singapore-listed REITs is about 3% higher than the yield on a 10-year Singapore government bond.  In most developed markets, that spread is just 1% - a bullish sign, implying Singapore REITs offer a better buying opportunity than their expensive peers.  And compared to U.S. REITs, which now yield just 4.6%, CapitalMalls Trust pays a 13% greater yield, denominated in a stronger currency supported by a healthy national economy.

Plus, Moody’s Investor Services recently assigned a corporate family rating to CapitalMalls Trust, issuing the highest rating ever assigned to a Singapore-listed REIT.  CapitalMalls Trust’s rating reflects its strong leadership in Singapore’s retail mall sector, its position as Singapore’s largest REIT and its impressive recurring income backed with tenant diversification.  In short, it’s the bluest of the REIT blue-chips.

From its all-time high in May of S$2.60, CapitalMalls Trust now trades at S$2.22 a share, or 15% off its high.  The REIT, along with the rest of the stock market, has not been immune to the severe global sell-off since May.  Buying at this entry point makes long-term capital gains, income distributions and currency appreciation an excellent buying opportunity in one of the world’s fastest growing financial centers this decade.

Buy CapitalMalls Trust (symbol CMT) at market on the Singapore Stock Exchange.  Please use the ISIN to place your trade in Singapore. The ISIN code is SG1M51904654. Buy up to S$2.60.

To purchase CapitalMalls Trust, investors can trade through International Assets Advisory Corporation in the United States (1-800-432-4402).  In Europe, members can use Jyske Bank Private Banking in Denmark and Anglo-Irish Bank Austria to trade Singapore stocks.  To track your investment, go to the Singapore Stock Exchange at www.ses.com.sg and click “REITs.”

Eric Roseman is the Investment Director for The Sovereign Society as well as founder and editor of Global Mutual Fund Investor (GMFI), a monthly newsletter that highlights the world’s best managed offshore funds. Visit www.globalmutualfundinvestor.com  Eric Roseman also founded The Sovereign Society’s investment trading service, Commodity Trend Alert, in 2001. Eric’s weekly newsletter, Commodity Trend Alert, focuses on the best global commodity plays worldwide. For more information, visit www.commoditytrendalert.coms