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Clal Finance Batucha today issued an Outperform investment rating for Excellence-Nessuah's real estate investment trust REIT-1, even though the fund's participation units have lost its about 5% of their value since it was floated last September.

Despite that, analyst Benny Dekel has faith in the share, and lists the reasons why. However, investors might do well to remember that the Clal Insurance group, which controls Clal Finance Batucha, also owns shares in REIT-1 through its provident and mutual funds. Of course, it's also true that a good opinion of REIT-1 would be why it bought those shares in the first place.

Dekel's 12-month price target for REIT-1 is NIS 10.80, which is 18% above its present level on the Tel Aviv Stock Exchange this morning.

He appraises REIT-1 as being worth NIS 448 million at full dilution, while its market capitalization is NIS 307 million.

REIT-1 invests in and manages yield-generating properties. Its policy is to distribute at least 50% of its profit each year as dividends, a policy that Dekel believes will generate returns of at least 5% a year.

He also believes the trust will shortly significantly expand its assets, which presently include the Robogroup headquarters, Amdocs' complex in Raanana and three other properties, which Dekel appraises at NIS 625 million.

Actually, REIT-1 has yet to finalize the deal for the Amdocs complex, which Dekel says is worth NIS 373 million.

One risk associated with the company is its young age, less than a year and a half.