KGI maintains 'outperform' call after CAD interviews EC World Reit manager's CIO

Singapore

KGI Securities on Friday maintained its "outperform" call on EC World Real Estate Investment Trust (EC World Reit), despite news that the chief investment officer (CIO) of its manager had been called up for an interview by the Commercial Affairs Department (CAD).

The Reit's manager had said in a bourse filing on Thursday that CIO Li Jinbo was interviewed in connection with an investigation into an offence under the Securities and Futures Act.

As part of the probe, the CAD and the Monetary Authority of Singapore (MAS) had also sent a letter dated June 30 seeking "certain information, documents and electronic devices" from EC World Reit's manager.

CAD had indicated that EC World Reit and its manager are not under investigation, the manager added. EC World Reit's manager said it "intends to fully cooperate with the CAD and MAS in their investigation".

In a research report on Friday, KGI analyst Amirah Yusoff said she did not believe the investigation into Mr Li had "any relation to the Reit (real estate investment trust) or its manager, and thus will not have any effect, operationally or otherwise, on the Reit's performance".

Should Mr Li have been involved in any unauthorised or illegal transactions in relation to any of the Reit's properties, she added, the Reit and its manager would have likely been included in CAD investigations.

"CAD's request for the provision of company documents and items relating to Mr Li's work is a common part of any investigation procedure relating to an individual. As a result, unless implicated by Mr Li, and pending further information by CAD, MAS or EC World Reit, we remain doubtful that the investigation has any relation to the Reit or any of its properties," Ms Amirah said.

KGI Securities maintained its target price of S$0.73 for EC World Reit. Units of the Reit ended Friday down 9.02 per cent or six Singapore cents at S$0.605.

The Reit's manager on Thurs-day said that Mr Li had been put on a leave of absence, at his request, pending the outcome of "the matter". The manager's nominating and remuneration committee will "review his appointment" when there is sufficient information made available to the manager.

The manager added that the Reit's business and operations have not been affected. Its chief executive Goh Toh Sim has been overseeing the investment and asset management functions of the manager and EC World Reit since the Reit's initial public offering.

Mr Goh will continue to actively perform these functions, the manager said.