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First REIT: Excess rights allotment.

Friday, December 31, 2010


On 29 Dec, I blogged about how First REIT's rights issue was a resounding success.  From the comments and emails so far, it seems that First REIT favours smaller investors for this rights issue.

See comments in the blog post here.

I have arrived at the following hypothesis based on the data collected so far:

1.  Entitled rights: 5,000 to 8,750,
excess rights allotted: 1,000.

2.  Entitled rights: 10,000 to 38,750,
excess rights allotted: 2,000.

3.  Entitled rights: 40,000 to 98,750,
excess rights allotted: 3,000.

4.  Entitled rights: 100,000 to ???,???,
excess rights allotted: 4,000.

I don't have data for entitled rights below 5,000 and beyond 100,000.

Of course, holders of odd lots would have the advantage of rounding up odd lots, be it 250, 500 or 750 units. These would add to the excess rights allotted.

I welcome more comments and feedback on whether my hypothesis is correct. Congratulations to fellow First REIT unitholders successful in getting excess rights.

SINGAPORE : Singapore's healthcare real estate investment trust First REIT on Friday said it has completed the acquisition of two Jakarta hospitals.

The two new Indonesian healthcare properties include the Mochtar Riady Comprehensive Cancer Centre as well as Siloam Hospitals Lippo Cikarang, a six-storey hospital that began operations in 2002.

With these acquisitions, First REIT said it has crossed a significant milestone as its assets under management have almost doubled to S$612.8 million as at December 31.

The trust's manager revealed that it aims to achieve a portfolio size of S$1 billion in two to three years...

...Meanwhile, the manager of First REIT revealed that based on projection year 2011, the trust's gearing level will stand at about 17 per cent, which is significantly lower than the regulatory limit of 35 per cent.

The manager of the trust added that this will provide it with sufficient headroom for future accretive acquisitions, and it will continue to look out for other healthcare-related assets in Asia to further raise its asset base. 

Complete article here.

28 comments:

Drizzt said...

so it means that its not how much you want but how much you have!

Drizzt
Investment Moats.com

AK71 said...

Hi Drizzt,

Yup, the idea is similar to AIMS AMP Capital Industrial REIT's earlier rights issue.

However, with that one, there was a formula which could be applied to all. The formula was a bit complicated but it was found out by LP.

For First REIT, it seems that a tiered approach was used. I could be wrong since the data I have at hand is a small sampling of all the people who have applied for the excess rights.

Mknace said...

:) :) :)
terbaeekkk!!!!

AK71 said...

Hi Mknace,

Thanks, I think. :)

mark said...

I belong to the second tier. I applied for 2 excess lots (excluding rounding up), of which 1 by mistake and I had my 2 lots excess. So for that it seems correct.

AK71 said...

Hi Mark,

Thanks for sharing your results. Happy New Year! :)

la papillion said...

Hi AK,

I've 9 lots before XR, and I get 2 lots excess, and an extra 750 shares to round off :)

AK71 said...

Hi LP,

You would fall into Tier 2 with an entitlement of 11,250 rights. So, getting 2,000 + 750 excess rights is correct. Congratulations! :)

Bluebox said...

Hello! AK,

Good info. Have been trying to find out the excess allocation formula for quite a while. Suspected that it is tiered and dependent on existing rights subscribed but need confirmation. You provided me that. ;-)

Tier 3 probably starts at 50,000. I have 41,250 rights, allotted 750 + 2,000 excess. Quite happy considering the limited unsubscribed excesses...

Cheers!
Bluebox

AK71 said...

Hi Bluebox,

That is strange. CK has 42,500 entitled rights and was allotted 3,500 excess.

Someone else got 43,750 entitled rights and was allotted 3,250 excess.

Could it be that Tier 3 starts at 42,500 then? So, 41,250 is the tail end of Tier 2. Very likely.

Thanks for contributing your numbers. Happy New Year! :)

Anonymous said...

I have 10 lot bought with Cash.
Applied for excess of 40+ lot.

Got excess of 2.5 lot.

CPF portion dont know yet

Verbatin

AK71 said...

Hi Verbatin,

10 lots of First REIT means you were entitled to 12,500 rights. So, getting 2,500 excess rights confirms my hypothesis. :)

Happy New Year!

bummy said...

AK, a few more numbers for you :

Cash 1 – mother share 10k, entitled 12.5k, excess applied 12.5k, total rights share 15k

Cash 2 – nil paid right shares 20k, entitled 0k, excess applied 30k, total rights share 0k

SRS 1 – mother share 14k, entitled 17.5k, excess applied 3.5k, total right share 20k

SRS 2 – mother share 5k, entitled 6.25k, excess applied 3.5k, total right share 9k

:)

Anonymous said...

Happy New Year AK.
I had 4 lots, got 5 lot rights, and 1 lot excess. Now total 10 lots at average price of $0.594.

L

AK71 said...

Hi bummy and L,

Thanks for sharing your numbers. So far, my hypothesis seems to be correct.

Happy New Year. :)

Anonymous said...

I hv 6000, entitled to 7500. I applied for excess, and I got total 10000. Info for yr statistics.

AK71 said...

Hi Anonymous,

You have 7500 entitled rights but received 2500 excess rights? It seems that you were given 1000 more excess rights than what my hypothesis suggests. More tweaking needed.

Maybe Tier 1 (1,000 excess rights) is for 1,250 to 6,125 entitled rights? Hmm..

Ana said...

AK71,
Question. I got back the funds for the unalloted rights (52,000 x $0.50 = S$26,000) on 31 December via the CDP account.

I bought the excess rights on the open market, and paid an average of $0.165 per right, ie $8,580 in total.

will I get the $8,580 back?
Or will they become First Reit's excess funds?

Ana

AK71 said...

Hi Ana,

Am I right to say that you bought 52 lots of nil-paid rights in the open market? You would have paid $8,580 to the person who sold you his nil-paid rights. This is non-refundable.

Basically, you owned 52 lots of rights and were entitled to convert these into normal units. They were not excess rights. When you were at the ATM, you should have entered your acceptance and not apply for excess rights.

I guess you must have entered application for excess instead of accepting the rights. That's why you got back $26,000.

la papillion said...

Hi Ana,

I don't know what to say....

Too late to do anything now too. Be careful next time...

ZZ said...

Hi AK71
I bought mother share 5 lots before XR. Entitled to 6.25 lots. Apply for 5.75 lots of excess right and finally got 2.75 lots of excess rights. A good New Year gift!

Thank you.

AK71 said...

Hi ZZ,

The proportion of excess rights you received is very generous. I am sure your average price is much lower due to this. Congratulations! :)

Chu Yeow said...

FYI First REIT got some analyst coverage today by OCBC. Summary is Buy, fair value $0.84. Hope this stock gets more analyst coverage.

AK71 said...

Hi Chu Yeow,

Thanks for sharing this happy news. :)

84c is higher than the fair value of 80c I ascribed to First REIT. Looking forward to it. ;)

First REIT: XR and fair value.

jason said...

AK71/Chu Yeow, i have read through the OCBC report, quite extensive and comprehensive. You can download it at remisiers.org - click "research" then go to today's date 7th Jan 2011 and you will see the OCBC First REIT report, some 27 pages.Good stuff!

AK71 said...

Hi Jason,

Thanks for the lead. :)

So, you buying more units of First REIT? ;)

jason said...

Investing for my mum - got 40000 rights at 0.17, quite the bargain and so sitting on 40 lots of 0.67 which is about 9.2% yield, not withstanding the capital gain already in the pocket at current price. See if the yield can drop to 7% !!

AK71 said...

Hi Jason,

With an estimated DPU of 6.4c, the yield at 67c is closer to 9.55%. Very nice. :)

A 7% yield? That would mean a unit price of more than 90c. Even nicer. ;p

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