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CitySpring Infrastructure Trust: Rights issue.

I divested my investment in CitySpring Infrastructure Trust last year in October. At that time, the Trust was trading at 60.5c/unit. Long regarded the investment as a mistake, the divestment was premised upon the Trust's weak fundamentals and relatively low distribution yield.

The Trust's last done price was 53.5c/unit today and its managers announced a rights issue to raise about $210.2 million in gross proceeds to strengthen its balance sheet. Each unitholder will be asked to buy 11 new CitySpring units for every 20 held at 39c per rights unit. This rights issue is, more or less, expected with a very weak balance sheet.

I have mentioned before that rights issue to fund yield accretive purchases is good for unitholders. However, a rights issue to "strengthen balance sheet" which, basically, acknowledges a weak balance sheet in the first instance is not a good deal. They are asking for money to pay down debts. So, this rights issue lowers both the DPU and distribution yield straightaway.

A unitholder with an investment of 20 lots in the Trust would end up with 31 lots if he subscribes to his entitlement. He would still get the same total quarterly income distribution in dollar terms with 31 lots as he did with 20 lots. A lower DPU and distribution yield. Definitely not a good deal.

Good luck to existing unitholders.

Related post:
CitySpring Infrastructure Trust: Thoughts on divestment.

Read announcement here.

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Cityspring makes rights offer to raise $210.2m
Thursday, 30 June 2011

© 2011 - The Edge Singapore

Mr. Market is always right.

I blogged about my partial divestment of Saizen REIT as price gap closed at 15c. I still retain more than 10% of my original investment in the REIT. See blog post here.

As Saizen REIT was the largest investment in my portfolio, making up some 40% of total funds invested (excluding funds in my frozen portfolio), the amount of money released was no small change. Leaving the money in the bank was not an option with interest paid on savings a paltry 0.1% per annum.

So, at the right time, I moved bulk of the funds into Cache Logistics Trust, First REIT and Sabana REIT. I blogged about these quite a bit too.

See the following blog posts:
Cache Logistics Trust: Accumulate on weakness.
First REIT: Bought more at 73.5c.
Sabana REIT: Bought more at 93.5c.

Another round of income distribution from all three REITs was received in the last few weeks. The unit prices of all three REITs also went up in the same time.

Today's closing prices are:
Cache Logistics Trust: 97c.
First REIT: 79c.
Sabana REIT: 94c.

What does this suggest? Investing in these REITs has been and still is the right thing to do. Mr. Market is always right.

My largest investment in a REIT now is in AIMS AMP Capital Industrial REIT. The unit price has moved up very nicely as well to 22c. So, the units I accumulated at 19.5c, 20c and 20.5c back in March are in the money too.

Recently, I have taken the opportunity to divest partially and I blogged about my reasons for doing so as well. Read it here.

Generally, I am going to hold on to these REITs for their very attractive distribution yields. I could divest some if they become overvalued (based on fundamental analysis) or overbought (based on technical analysis) or both. No reason to divest until then.

This has been another long day as I try to get used to a new routine. This is likely to continue for weeks to come. Physically and mentally exhausted, I am not in the best condition to trade the market. Being more than 80% in REITs, investing for income, is the best strategy for someone in my position now. Good luck to us all.

Related posts:
REITs lower portfolio risk.
Staying positive on S-REITs.

Saizen REIT and Sabana REIT.

Moody’s Investors Service has upgraded Saizen REIT’s corporate family rating to B1 from Caa1 following the conclusion of their rating review.

The stable outlook reflects Saizen REIT's improved liquidity and the absence of material refinancing needs in the next two years.

Read announcement here.

Sabana Real Estate Investment Management Pte. Ltd., the Manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust, is pleased to announce the maiden donation of its non-Shari’ah compliant income to the Straits Times Pocket Money Fund and the Embassy of Japan for the relief and reconstruction efforts in Japan.
 
Read announcement here.

Win a fresh Apple iPad 2!

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The Fresh at 25 Party will be a closed door event with celebrities and DJs, so send in your designs to celebrate the juicy goodness and add a fresh face to Marigold PEEL FRESH!

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Golden Agriculture: Strong resistance.

I am still bullish on the long term fundamentals of crude palm oil. The more robust demand for the vegetable oil in emerging economies, especially in China and India, will provide a floor to any correction in price.

A correction? Yes, prices do not go up in a straight line. If prices do move higher, they climb a wall of worries.

The share price of Golden Agriculture is finding it hard to move higher than 68.5c in recent sessions. If we take a look at the daily chart, it becomes clearer why this is so. 68c is where we find the merged 20d, 50d and 100d MAs.

Volume has been relatively thin and we have to bear in mind that share price is moving closer towards the apex of a symmetrical triangle. If volume does not increase with an accompanying push to move price higher, we might see support at 66c broken and price moving lower.

If price were to retest support at 66c, I could buy more shares in the company but it would be a smallish purchase in case price were to move higher. A trend is not over until it is over, after all.

In the meantime, keep an eye on the strong resistance at 68.5c. If that were to be taken out convincingly, we could see 70c next.

Related post:

Golden Agriculture: A steeper trendline resistance.

Selling shares of Capitaland and CapitaMalls Asia.

I did a contra on the shares bought earlier in the week for Capitaland and CapitaMalls Asia yesterday. To me, the way in which the share prices were moving higher on lowering volume did not look sustainable.

Downtrends are rivers of hope, no doubt, but I would not get too hopeful especially if the technicals hint of a weak rebound. Lock in some gains and let others take on the higher risk of holding the shares in the downtrend.

If prices should go higher, congratulate the buyers. They took on greater risk and if they were to make money in the process, they deserve it.

Capitaland:

CapitaMalls Asia:

If prices were to move higher next week to test resistance provided by the longer term MAs, I would move to cut my long positions in these two counters, bearing in mind that their downtrends are very much intact.

I cut losses if prices rebound to test resistance and not when they are moving lower.

Related post:
The long awaited technical rebound.