Tea with AK71: Taste of Hong Kong.

Firstly, this has nothing to do with my recent trip to Hong Kong. This happened in Singapore. :)

I was at Illuma and had a new dining experience. Well, it was a new experience to me.

Taste of Hong Kong. Business was good!

Instructions at every table.

Waffle with bonito flakes, luncheon meat and something saucy. I loved it!

Inexpensive comfort food in an air-conditioned environment with no service charge. Burp. I mustn't do this too often. Promise, I'll try.

For photos of my recent trip to Hong Kong, go to my travel blog: click here.

REITs and rights issues: A zero sum game?

There has been a deluge of articles on REITs recently and my own blog posts on the subject have attracted many comments although not as many as the blog post in which I revealed my total passive income from S-REITs for the first nine months of this year. ;p

I received comments from a reader, Chopra, regarding my simplistic analogy given in "REITS and rights issues: A Singaporean tale." Read it here.

Hi Chopra,

I did say my analogy is a simplistic one. It was partly a tongue in cheek blog post in response to the rather simplistic picture of REITs painted by certain critics.

Of course, there are other factors to be considered in rights issues before we could make an informed decision on whether they are good, neutral or bad for the different types of investors involved.

To have a blanket statement that REITs will take back all the income distributed to unitholders through rights issues is not only misinformed, it is misleading. That is the primary reason why the article came under fire.

Saying that rights issues are zero sum games is just another way of saying the same thing. So, I cannot agree with you. Some rights issues are beneficial to unitholders and some are not. Just compare the rights issue of First REIT with that of CitySpring Infrastructure Trust not too long ago. You will see what I mean.

Generalisations are often convenient but they are also often inaccurate.

We must realise that REITs give out at least 90% of their income to unitholders. So, they need to leverage up or raise funds through equities to grow. Whether these activities are carried out sensibly is another question but anyone unhappy with such a model should give REITs a wide berth.

I won't go into how much it would cost an investor to take part in each rights issue or to sell their nil-paid rights. I would also not look at the frequency of rights issues. It is like looking at the trees and not the forest. In fact, I do not mind frequent rights issues if they should be consistently or mostly beneficial for me as a unitholder.

Finally, I won't compare REITs and blue chips. They satisfy different investors with different objectives.

Personally, investing in certain REITs has been very rewarding for me. I am also vested in a few blue chips. Certainly, not all REITs are bad and not all blue chips are good. Would I compare their performance against one another? I could compare apples and oranges but I won't. I enjoy both.