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First REIT: Nil-paid rights start trading.

Wednesday, December 8, 2010

First REIT's nil-paid rights started its first day of trading at 22c but closed at 19.5c. This probably affected the mother share as First REIT was sold down to 70.5c. Why? Well, if we could buy the nil-paid rights at a bargain, why buy the mother share? Sell the mother share, buy the nil-paid rights and make some money on the difference.


So, if someone bought the nil-paid rights at 19.5c, including the 50c to be paid to exercise the rights, the total price is only 69.5c. Why should he pay 70.5c for the mother share?

Fundamentally, there is no compelling reason to sell below 70c as the yield is a handsome 9.14% at this price. However, if it does get sold down, I see immediate support at 69c which is where the rising 100dMA would be approximating soon. I might buy more then.

Related post:
First REIT: XR and fair value.

23 comments:

ortho said...

Hi AK71,
I do not have any share of First REIT, if I buy the rights and pay 50c for it, am I eligible to apply for excess rights?

AK71 said...

Hi ortho,

I think you could try. When you go to the ATM to pay 50c/unit to exercise the rights, try for excess rights at the same time. :)

Anonymous said...

Hi AK71,
I'm an avid reader of your blog, and really appreciate the numerous updates.. Great job!

Anyways, i'm a student so my holdings in First Reit are small, only 2 lots.

So i was wondering if it is 5 for 4 rights, that means I'm entitled to 2.5 lots? I thought they ignore the 0.5 lots?

Cos I wanna go to the ATM to apply, but not sure on how much i'm entitled to.

Also there's no limit on how much excess rights you can apply for right?

Thanks a lot!

WK said...

i din know the rights has started trading ytd... ahhhh

la papillion said...

Hi ortho,

I think you can try but i doubt you'll get any excess rights. From my understanding of the aims rights exercise, the number of excess rights allocated to you has more to do with the number of mother shares that you had rather than any other factor. Since you had zero mother shares to begin with, I don't think you'll have any excess rights allocated to you.

Please do check back whether you do get any or not. It'll be good data for future references :)

Anonymous said...

Hi AK71,

Ya, it make more sense to buy the rights since after conversion @ $0.50 per unit it is still cheaper than the mother unit.

I am queing to get the rights at $0.19

HL74

AK71 said...

Hi Anonymous,

If you have 2 lots of First REIT units, you would be entitled to 2.5 lots of nil-paid rights. So, you would end up with odd lots. You would, thus, have priority when it comes to excess rights allocation.

Wait for the package from CDP which you should be getting within these 2 days. Relevant information including how many rights you are entitled to would be included.

There is no limit to the number of excess rights you could apply for but you might not get all that you want.

Could you include your name or initials in future comments? Thanks. :)

AK71 said...

Hi WK,

Haha.. You thinking of selling your nil-paid rights? Trading of nil-paid rights closes on 16 Dec. :)

AK71 said...

Hi LP,

I suspect it would be similar to the experience we had with AIMS AMP Capital Industrial REIT's rights exercise as well.

You shed light on a most mind-boggling process at that time, Master Mathematician (MM). When I chatted with charlesming and bummy about that incident again recently, we were still very much in awe. ;)

However, it would be interesting to see if anyone in Ortho's shoes would be allocated any excess rights. :)

AK71 said...

Hi HL74,

Given the current trend, I think you would get it at 19c. :)

Anonymous said...

Hi AK,

Hope you're having a good day.

I have been trying to accumulate some Singapore blue chips. Noticed SPH fell a substantial 4.95% this morning. What's going on? You think it's a buying opportunity?

Cheers,

Victor

WK said...

i would just may if it spikes to $0.30... haha

AK71 said...

Hi Victor,

Thanks for asking. I took half day leave to run some personal errands and to see the doctor. Just got home a while ago. All in, a nice day. ;)

SPH went XD today. So, any shares of SPH bought from today will not be entitled to dividends payable later this month. That's probably why the price declined. Nothing alarming. :)

AK71 said...

Hi WK,

That seems unlikely now but we could always hope. ;)

Anonymous said...

I hope it's nothing serious that you had to see a doctor for!

I actually bought a little bit of SPH today. As I said I have been waiting for an entry point to accumulate some singapore blue chips for quite a while. Any more recommendations? Also (finally) topped up AIMS-AMP at 0.22. I guess I lost patience :)

BTW I really appreciate your timely and sincere response to readers' comments.

Cheers,

Victor

AK71 said...

Hi Victor,

I try my best to reply within 24 hours of receiving comments and emails. If I don't, I probably have very good reasons. :)

I am full of allergies. So, I am routinely in need of medication to alleviate my sufferings (note that the word is in the plural). Donated to AK71 Pocket Money Fund or bought something from my ZUJI banners lately? ;p

I believe that 22c/unit for AIMS AMP Capital Industrial REIT is still a very good price. I won't be surprised if this REIT trades at a higher price in the new year. ;)

I am not looking around for new stuff to invest in. There might be some good counters out there but I am comfortable with what's already on my plate. :)

Anonymous said...

>Donated to AK71 Pocket Money Fund or bought something from my ZUJI banners lately? ;p

Just did, check your paypal account. Now I know what AK stands for :)

Don't start on allergies... I am almost constantly on Zyrtec.... and as winter is coming my eczyma is starting to flare up :(

Victor

AK71 said...

Hi Victor,

Hey, thanks so much for the generous gesture. I appreciate it. :)

I suffer from finger eczema. I can imagine being in a cold and dry environment would make things worse. I am always applying hand moisturizers. Well, I try to remember anyway. Otherwise, ouch! :(

The doctor reminded me just now not to use too much of the stuff he gave (more accurately, sold) me because they are steroids. I might end up with cataracts. Sigh.

Anonymous said...

This is so off topic that it's embarrassing for me to post here... but try vaseline. It helps me cut down use of steroid cream a lot.

Victor

AK71 said...

Hi Victor,

Haha.. Thanks so much for sharing this. I have tried Vaseline before but I find EQ much better. You should try it. I have tried Nivea too but found it too watery.

AK71 said...

Hey Victor,

I read my reply to your last comment and guess what? I got the name wrong, it is QV cream and not EQ. Growing muddled in my old age. ;p

Anonymous said...

LOL.... EQ cream would be good for me too, I can certainly do with a higher EQ!!

Today I finally sold all my Cambridge Industrial Trust and used the money to buy First REIT at 0.68. Hope that's a sensible swop.

Victor

AK71 said...

Hi Victor,

Haha... More EQ for me is good too, I am sure.

I see long term support for First REIT at 67c. I do not expect this support to be compromised. If it does crack, I expect it to be recaptured quite quickly.

Good luck to us all. :)

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