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Ascott REIT's mega discounted rights issue.

Friday, March 17, 2017


Hi AK
With the recent rights issue of Ascott reit, i read that the DPU and NAV per unit will most likely drop after this event.
Can you share your thoughts about this(the reason for this rights issue)?

Declining DPU. Source: HERE.

Hi AY,
I don't like Ascott Residence Trust. I don't have this.
They are always raising funds but I don't see performance improving.

If you want to read more about rights issue, here are some of my blogs you might be interested in:
1. http://singaporeanstocksinvestor.blogspot.sg/2011/10/reits-and-rights-issues-dilutive-or-not.html
2. http://singaporeanstocksinvestor.blogspot.sg/2010/09/reits-simply-explained.html
3. http://singaporeanstocksinvestor.blogspot.sg/2011/11/reits-and-rights-issues-singaporean.html



I feel that unit holders would have been better off without the acquisitions and the mega rights issue.

Reference:
"Ascott Reit unit holders will have the option of purchasing up to 481.7 million rights units at a ratio of 29 rights units for every 100 units they own. The rights units will be issued at 91.9 cents - a 21.5 per cent discount to the closing price of $1.17 per unit on Monday. Ascott Reit expects yields of up to 4.5 per cent for the acquisition of AOS and 5.4 per cent for the German properties
." Source: The Straits Times, 8 March 2017.

1 comments:

AK71 said...

Ascott Residence Trust’s DPU for 2Q 2017 was 1.84 cents (-14% yoy).

Annualizing 1H’17 DPU we get about 6.8 cents/ unit, translating to a dividend yield of 5.76%. As compared to its peer group average of close to 7% yield, we advise minority shareholders to “Sell Into Strength”.

Source:
Lim & Tan Research

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