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"E-book" by AK

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3Q 2018 passive income (non-REITs): RHT.

Thursday, September 27, 2018

In 3Q 2018, I also added to my investment in RHT Health Trust at 72c a unit when Mr. Market got the jitters and the unit price plunged.

The reason for a nervous Mr. Market could be due a cautionary note issued by RHT's external auditors on its weak balance sheet.

I received messages from readers and my reply to each and every one was more or less the same.

"The cautionary note really was not saying anything new nor was it earth shattering."

If we sell simply because the share price is declining and we are fearful, that is probably a bad reason.

Warren Buffett said the dumbest reason to buy something is because the price has gone up.

Probably, the dumbest reason to sell something is because the price has gone down.

If we sell because we think that RHT cannot continue as a going concern just because of the cautionary note from the auditors, that is probably a bad reason too.

However, if we sell because we think that RHT could not reasonably be expected to refinance their debt, that is a good reason.

I didn't happen to think that way.

Anyway, peace of mind is priceless.

So, although we should have mental fortitude and the right attitude as investors, we should do what gives us peace of mind.

In late August, RHT announced that sale of its assets to its parent would go on.

After repayment of external borrowings, estimated net consideration per unit would be 82.5c.

Unitholders expected to receive about 76.6c per unit. (See comments section for more on this.)

The proceeds will help to replenish my war chest.

Watch video: 
"Malaysia's IHH Healthcare Wins Fortis Bid At Rs 170 Per Share."

1. Disposal of entire asset portfolio.
2. Results of EGM held on 26 Sep 18.


AK71 said...

For the reader’s convenience, except where the exchange rate between the INR and the SGD is expressly stated otherwise, certain INR amounts in this Announcement have been translated into SGD based on the closing exchange rate on 20 August 2018, being the latest practicable date prior to the printing of the Circular (the “Latest Practicable Date”) of INR50.90:SGD1.00 as extract from Bloomberg L.P.

However, such translations should not be construed as representations that any INR amounts which may be received in connection with the Proposed Disposal or otherwise can or will be converted into SGD at that or any other rate.

As at the date of this Announcement, given that the date of Completion cannot be meaningfully estimated, the Trustee-Manager has NOT entered into any forward contracts in respect of the Consideration.

Accordingly, should the INR depreciate against the SGD, the Consideration received in SGD will be correspondingly less.

Roaming fighter said...

Hi Ak,
Total proceeds less adjustment for warranty is INR46000 mills,less loan SGD234.1 mills
Based on today exchange rate of SGD1:INR53.3, we are looking at SGD0.755 plus dividend from Mar to Dec about $0.02-0.03.
The current stock price of $0.74 inline with potential pay out.

AK71 said...

Reader says...
Still can invest at last minute right?
74c now, downside protected.

AK says...
I don't think it is very rewarding to buy into RHT now.
However, if you are thinking to continue holding, RHT has residual value.
They are not distributing all of the proceeds and some 5% will be retained.
So, it is like getting back your money and your investment in RHT is "free". 🙂

AK71 said...

Hi Roaming Fighter,

Thank you for crunching the numbers and sharing with us here. :)

AK71 said...

Wong Yao Keng says...
Around SGD 30mil will be left post transaction.
Hope future RHT will do better than past.

AK says...
My investment in RHT, overall, has turned out pretty well, actually.
Can't complain. :p

Laurence said...

Wow, looks like AK is also famous in InvestingNote.
AK is the undisputed Oracle of REITs. ;)

Quoted from InvestingNote's RHT HealthTrust thread:

"AK has a gigantic portfolio. Most investor's portfolio are light years away from his. He can take big hits on his portfolio & not feel a thing, but to most folks it will lead to sleepless nights & a severe migraine. I don't think it's a good idea to copy his every move blindly. One need to adapt it to one's financial situation."

AK71 said...

Hi Laurence,

For sure, we should not bite off more than we can chew.

That is a reminder to myself too.

I don't like choking.

Some might actually choke to death. -.-"

AK71 said...

Reader says...
RHT subsidiary changed name to THR infrastructure, looks like the trust is here to stay.
Also, may I ask why RTO may be good for us?

AK says...
Eh. They might do what Saizen REIT tried to do. Saizen REIT sold all their assets but remained listed as some parties might be interested in a RTO and willing to pay more than what we get from liquidation. 🙂

Reader says...
One of the substantial shareholders up his stake after sale of assets announcement. That could mean something too.

AK says...
Could be. I will just wait and see. Do nothing. I good at that 😛

blazingruby60 said...

hello AK
its been a while i wrote. belated happy new year! RHT share price dropped cos it has distributed back money back to shareholders and has dropped to 0.25 whats going to happen next? we wont be getting anymore dividend right? thanks n cheers

blazingruby60 said...

hello AK
its been a while i wrote. belated happy new year! RHT share price dropped cos it has distributed back money back to shareholders and has dropped to 0.25 whats going to happen next? we wont be getting anymore dividend right? thanks n cheers

AK71 said...

Hi Ruby,

Without any income producing assets, RHT is more or less just a shell now.

AK71 said...

Jack James says...
As for RHT Health Trust , why they give such dividend payout of S$0.752 , and now price corrected to 2 cents plus .
They intend to delist it ? Or they want to increase the trading volume for the future as the price now is in pennies .

AK says...
I blogged about this before.
Read this blog.

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