First REIT

[Drizzt]

actually regreted not buying at 72 cents and below. one big regret there.

[piggo]

Haha its not a good habit to look back and regret past decisions ;p

[Drizzt]

its not good but it happpens too often for my liking.

[Nick]

Hi Guys,

I have been vested in First REIT for quite a few months now. I am quite pleased (and impressed) with the consistent payouts over the past 3 years. I guess we must save up for any equity fund-raising that may arise if they choose to acquire the 2 Hospitals from their sponsors. I believe it is valued at 1,350 Trillion Rupiah or approx S$200 million. Hopefully it will be DPU accretive acquisition.

Cheers
Nick

[kazukirai]

Major annoucement today.

First REIT annouces the acquisition of two properties in Indonesia. Will finance the acquisition via a 5 for 4 Rights Issue and the remainder through a loan facility with OCBC.

More thoughts to follow later.

Annoucement

Presentation

sreitinvestor has a post on the major points of the acquisition here

[Nick]

Don't understand the need to issue units at 50 cents when its share price stands at 98 cents. They could have issued less shares at higher prices which would have bumped up the absolute DPU value. Will look through it carefully tonight.

[d.o.g.]

Don't understand the need to issue units at 50 cents when its share price stands at 98 cents. They could have issued less shares at higher prices which would have bumped up the absolute DPU value.

There is no difference to the unitholder whether more units are issued cheaply or fewer units are issued more expensively.

Here's a simple worked example:

Initial units: 100
Trading Price $1
Total Distribution $10
DPU $0.10 ($10 / 100 units)

Case 1:
Rights Units 100
Rights Price $1
Distribution $20 (Acquisition adds $10 distribution)
Post-Rights DPU $0.10 ($20 / 200 units)

Case 2:
Rights Units 400
Rights Price $0.25
Distribution $20 (Acquisition adds $10 distribution)
Post-Rights DPU $0.04 ($20 / 500 units)

In both cases unitholders still own 100% of the distributions.

In Case 1 there are 200 units after the rights, so DPU is $0.10.
In Case 2 there are 500 units after the rights, so DPU is $0.04.

Either way, unitholders still get $20 in total distributions. For a minority unitholder who takes up all his pro-rata rights, the situation is exactly the same.

[Nick]

Thanks for clearing up my misconception !

[iisterry]

It increases the amount of outstanding shares which in turn, increases liquidity though.

[Stocker]

Is Lippo having a good track records/reputation in Indonesia ?