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Recently, I talked to myself about helping my parents to pay for their rights entitlement for both AIMS APAC REIT and IREIT Global.
This will take a chunk of money.
As these two REITs are also two of my largest investments, I have to set aside a relatively large amount of money to pay for my own rights entitlement too.
After much thought, I made the decision to forgo my own rights entitlement for AIMS APAC REIT for the following reasons.
1. The money raised is not for any activity that would immediately generate more income.
Of course, I might see DPU increasing again in future if they use the money prudently for AEIs and redevelopment.
However, I won't see any return on the proposed additional investment right away.
2. My investment in the REIT is already free of cost.
All income generated by the REIT is really free money for me.
I don't have to add to my investment to have a good outcome even if I should take an 11% reduction in income from the REIT in the meantime.
Readers who have been following my recent blogs and the comments sections might remember that I talked to myself about these.
Now, hot from the press, we have firm details on IREIT Global's rights issue.
161 for 1000 units at 40.8c a unit.
IREIT Global initially used an illustrative rights unit price of 45c when they announced the proposed acquisition of retail parks in France.
That sent their unit price tumbling down to 44.5c at one point.
When readers asked if that was a good price to buy, I said that it appeared attractive to me with a potential 8% distribution yield.
However, I was waiting to buy at 42c because that was where the chart showed stronger support.
I also said in another reply that we must remember that 45c was only an illustrative price.
With IREIT Global already trading at 45c a unit, the rights issue would have to be at a lower price to be attractive.
So, I would wait.
Now, priced at 40.8c a unit, it is very attractive to me.
I wish I had more money in the war chest to apply for more excess rights.
At a unit price of 40.8c, I am looking at a potential 8.8% distribution yield from mostly freehold assets.
This is also on the back of a relatively strong balance sheet with gearing ratio at 33%, post rights issue.
With interest rates likely to stay higher for longer, I keep saying it would be business entities with stronger balance sheets that would see the light at the end of the tunnel.
The Fed chair has already hinted that a lowering of interest rates would not happen until 2 years later which means sometime in 2025.
Fortunately, IREIT Global has almost 100% of its debt on low interest rates fixed till late in 2026.
It is always darkest before the dawn.
I am quite happy to be paid while I wait.
If AK can talk to himself, so can you!
Related posts:
1. Rigths issues and parents.
2. T-bills and REITs: My plan.
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