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Second Chance Properties Ltd: REIT timing.

Thursday, February 6, 2014

When I blogged about Second Chance Properties Ltd in December 2012, I said:

"As an investment for growth, we have to be prepared for some headwind as real estate prices have very likely peaked. With more supply coming on stream, rental rates and property values could face downward pressure in the coming years."

Well, the company has done something very clever! They are selling "all 45 properties in its portfolio to REIT manager Celestine Management Pte Ltd for $175.4 million with the intention of listing the property fund as a REIT."

And this is what they said in a press release:

"Going forward, the board thinks that it is prudent to significantly reduce the group’s exposure to its investments in properties. Additionally, the opportunity to sell the properties en masse is a rare one and provides the group with an easier and more expedient means of disposing the properties as compared to selling each property individually." Source: The EDGE.

To me, it is quite obvious that they are exiting at a high. Do you think that the proposed REIT will be good value for money for investors like you and me at its IPO? I wonder.

Related post:
Second Chance Properties Ltd.

11 comments:

Tien Song Chuan said...

I got a feeling that many top people have already dumped their properties quietly. Sad...

AK71 said...

Hi Tien,

Someone must be buying. I wonder who are buying. Hmmm...

AK71 said...

NOTE: "the board thinks that it is prudent to significantly reduce the group’s exposure to its investments in properties".

So, anyone buying from them is not being prudent? Is that the message? LOL.

Hint, hint, nudge, nudge, wink, wink...

Shengle Su said...

I am a current holder of the shares..Any receommendation what i should do? Got them at 41.5cents.

AK71 said...

Hi Su,

Oh, I won't recommend you do anything. I am not allowed to. ;)

However, this move is going to benefit the company and, logically, all shareholders. There is no reason to sell. Shareholders might even get a special dividend.

Remember SPH and SPH REIT?
SPH or SPH REIT?

Tien Song Chuan said...

They are now sitting on a pile of cash. Lots of options on what to do next. I agree that this a very smart stock.

WONG C.H. said...

The company has recently disclosed how to spend the money. Is it still worth to hold the counter? AK71, which is your views on this? tks.

AK71 said...

Hi Wong,

Without going into too much detail, I believe that 2nd Chance was attractive as an investment for income because of its portfolio of properties.

Can the company continue to perform like before with its new plans? That is a question everyone wants answered but I don't think anyone really has the answer.

AK71 said...

Second Chance Properties' plan to sell a big chunk of its properties has fallen through.

The buyer, Celestine Management, which plans to buy and list those assets in a fund, did not receive the letter of eligibility from the Singapore Exchange by December 30, 2014.

fivon said...

Hi AK71

Do you have any clue what is the reason SGX not issuing approval after almost 1 year since Second Chance expressed their interest to off load their properties

AK71 said...

Hi fivon,

Your guess is as good as mind, I am afraid. :(

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