How did IREIT Global's rights issue turn out for AK?

I wasn't interested in IREIT Global's IPO but I was interested in IREIT Global as it owns freehold commercial properties in Germany and has big name tenants.

So, I have been keeping an eye on it, hoping to get in at a price that I thought would be able to deliver an attractive enough distribution yield that is more sustainable at the same time.




When IREIT Global planned a rights issue, I thought it was an opportunity to have a nibble. 

I came up with a strategy which I shared here in my blog on 3 July 2015.

The plan was to possibly secure a distribution yield greater than the 8% promised at IPO when units were offered at 88c a piece. 

The plan involved the application for excess rights to round up odd lots.

To read more about the strategy, please see related post at the end of this blog post.

A conversation with a reader a year ago.

Anyway, I bought 3,500 units from Mr. Market at a price of 81.5c per unit. The 45 for 100 rights issue meant that I would get 1,575 nil-paid rights. Subscribing for these rights units would give me a total of 3,500 + 1,575 units = 5,075 units.

If I were to apply for excess rights, I should be successful in rounding up odd lots. 

At that time, I thought I would be allotted enough excess rights to have a total of 6,000 units.

I would then get an average price of 67c per unit (i.e. $2,852.50 + $1,170 = $4,022.50/6,000). 

This would be just 1c higher than the 66c per unit I said would probably get us an 8% distribution yield, based on my estimates.

Well, I overlooked an important development. We are no longer in the days when 1 lot was made up of 1,000 units. 

For a while now, 1 lot is made up of only 100 units. What a mess!

So, theoretically, to round up my (now) odd lot of 75 units, I could be allotted only 25 excess rights to make a grand total of 5,100 units for me! 

That would really throw a spanner into the works as that would give me an average price of 70.6c per unit which is some 4.6c higher than 66c! 

It would mean an estimated distribution yield of only 7.48%!

Looking at the unit price of IREIT Global today which is 68c would have only made it worse.





Quite fortunately, this happened:

So, I was allotted 1,225 excess rights and I now have 6,300 units in total. Average price? 66.08c! This gets me much closer to 66c per unit which I estimated last month would probably mean an 8% distribution yield.

The Euro has strengthened against the S$ in the last month or so. It was 1 Euro to S$1.50 in early July and, today, it is 1 Euro to S$1.55. 

That is good news for me as it would help with delivering a higher distribution yield on my investment.




Everything else remaining equal, if IREIT Global's unit price should decline to 66c or lower, I could add to my investment in the REIT.

Related post:
IREIT: My strategy in its 45 for 100 rights issue.

Getting up to speed and a nice surprise!

I was away for a short holiday with my parents and I am now trying to get up to speed.

Lots of emails, comments and messages to reply to. I think most will know how it is like.

In case you are interested in what I did during my vacation, visit my travel blog: here. I will have more updates in the next day or two.

OK, as I was getting up to speed, I received a nice surprise.

See the following email dated 12 August 2015 from a reader. That's just yesterday:

Hey AK,

 

Will like to congratulate you on this first, know how much it means to you. Top 500 sites in Singapore, taken at 510pm.

 

You have done a great job in promoting financial literacy and educating Singaporeans. It is not easy to maintain a site and you have done it for 6 long years.  

 

Congrats AK!

And the attachment:

 

Yeah! And I wasn't even blogging in the last few days.

Thanks, everybody, for being so forgiving and for making me smile.

OK, I just checked. It seems like it was a touch and go. ASSI's rank is now 511 in Singapore.

Haha... ;p

Related post:
Why some might never be rich and why we soldier on?