25-07-2013, 02:42 PM
(25-07-2013, 02:17 PM)specuvestor Wrote: [ -> ]I'm trying to figure out what is the incentive for structuring a stapled offering.
If OUE HT does a rights offering, does it mean half the money will go to the BT?
"OUE H-REIT cannot issue (including the issue of partly paid units), transfer, register the transfer, consolidate or divide, redeem or buy back or cancel any of its units, unless the same action occurs in respect of OUE H-BT, and vice versa" -pg 230 of prospectus
Specuvestor,
I'm not very familiar with REITs, but my understanding is stapled BT + reits allows flexibility in terms of what the stapled security can do. REITs will enjoy corporate tax exemption but there are various conditions to be met. Hence for if the stapled security wants to venture, for eg, into overseas assets (which doesn't pay Singapore corporate tax anyway) investing via BT gives the manager added flexibility. They can decide to payout lesser profits from the overseas assets without affecting the REIT's tax status. Similarly the manager can use the BT for other things like development (again, more flexibility without affecting the REIT's tax status).
Please feel free to correct me if I'm off target here