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Frasers Hospitality Trust (FHT).

Thursday, June 29, 2017

Reader:
Frasers Hospitality Trust. I like this and invested in it last year and applied for excess rights.

I find FHT attractive because mostly freehold and spread across many countries. Yield is 7%+. Plus strong sponsor and brand name.

I am not good in analysing. Hope you will talk to yourself. :)


AK:
I don't like it when a REIT purchases properties and DPU goes down.

And the rights issue was in part to strengthen balance sheet which did nothing to improve DPU.

"The issue would also reduce FHT's debt levels and strengthen its balance sheet."
http://www.straitstimes.com/business/companies-markets/frasers-hospitality-trust-to-raise-266m-in-rights-issue

I don't like it when total distributable income goes up but DPU goes down.

"Distribution income for the quarter was up 3.1 per cent year-on-year... DPS in the three months as at end December 2016 was down 18.9 per cent year-on-year..."
http://www.businesstimes.com.sg/companies-markets/frasers-hospitality-trusts-dps-down-on-enlarged-stapled-security-base

As a shareholder, I should be very interested in what happens to the DPU. I feel that the shareholders could have been better off without the rights issue.

There are probably things to consider beyond that but my plate is full. ;)

Related post:
REITs and rights issue. 

3 comments:

nch said...

Hi, thanks for sharing and talking to yourself. I have learn a lot from you.

Since we are on right issues topic, there is another one that was announced last week, being the CDL Hosp Trust.

The DPS will fall from 10 cents to 9.43 and the DPS yield will reduce from 5.95% to 5.85% after acquisition and rights issue. Wondering which action I should take since i am a shareholder.

Hope you can talk to yourself about it if possible.

Thanks.

nch said...

Hi, thanks for sharing and talking to yourself and I have learned a lot from you.

Since we are on the topic of rights issue, CDL Hosp Trust has also announced one last week.

I am a shareholder and am deciding what is the best action.

The DPS will fall from 10 cents to 9.43 cents and the DPS yield will fall 5.95% to 5.85% after acquisition and rights issue.

Hope you can talk to yourself on this if possible. Thanks.

AK71 said...

Hi nch,

In a nutshell, I don't like rights issues which are to fund activities which are not DPU nor yield accretive, all else being equal.

For those who are vested, they have to make a judgement call on whether the investment concerned could see performance improve in time to come.

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