At the end of the day, there is just so much that a strong sponsor can do. It is risky to assume that a strong sponsor is equivalent to the REIT/company being safe. If a REIT has taken on too much leverage using aggressive property valuation, rights issue is still unavoidable. If you have chosen to go for that extra 50 bp of yield that comes about with riskier debt profile, then you should be prepared for what might happen. There is no free lunch in the world, though there might exist occasion where there is some mispricing.
Olam, CMT, DBS did not escape rights issuance when crisis hits.
You can have similar sponsor but very different level of management.
For e.g. compare the debt profile of CMT and CRCT as well as MLT and MIT. (the difference was much more drastic at end 2012 than at the moment)
Even First REIT and LMIR have achieved very different kind of returns despite sharing the same parentage to the Lippo Family.
2013
http://capitamall.listedcompany.com/news...29BA.1.pdf slide 23
http://crct.listedcompany.com/newsroom/2...9B99.1.pdf slide 25
http://www.mapletreeindustrialtrust.com/...eeting.pdf slide 32
http://www.mapletreelogisticstrust.com/d..._Final.pdf slide 14
2012
http://capitamall.listedcompany.com/news...DC82.1.pdf slide 15
http://crct.listedcompany.com/newsroom/2...83FE.1.pdf slide 22
http://www.mapletreeindustrialtrust.com/...eeting.pdf slide 24
http://www.mapletreelogisticstrust.com/d...-Final.pdf slide 16
(17-08-2013, 02:45 PM)Greenrookie Wrote: [ -> ]Hi Buddies,
I tried google about macauthercook industrial reits and all the info i can find are regarding the rights issues, the recap plan, etc.
I am actually trying to look for info earlier, why/how did it get into trouble? Or is it the Parent company that got into trouble, and cause the trouble to rollover to the reit?
Appreciate any links, any info any buddies might have? If it is the parent company that is in trouble, and hence the manager, why is there a need for such value destructing exercises?
Since the trustee hold the assets of the reits, and as far as I know, trustee and the sponsor/ parent company are separate identities, the how can the troubles of parents (to the extend of the stake of ownership) lead to almost insolency??
Any info on failed reit also appreciated. Trying to use these as case studies to further my knowledge and risk assessments of reits.
Moody's downgrades MI-REIT to Caa1; outlook negative
1219 words
3 June 2009
Moody's Investors Service Press Release
MOODPR
English
© 2009
Moody's Investors Service has downgraded MI-REIT's corporate family rating to Caa1 from B2. The outlook is negative.
This concludes the rating review extended on April 1, 2009.
"The downgrade reflects heightened financing pressure facing MI-REIT as a result of its funding requirement to complete its S$91 million acquisition of 4A International Business Park ("IBP") by 4Q09," says Kathleen Lee, a Moody's VP/Senior Analyst.
"The timing for securing this funding remains uncertain while the value of this asset has fallen by SGD20 million or 22%," adds Lee.
While Moody's notes that MI-REIT's S$201 million bank loan due 16 June, 2009, has been granted a 6-month extension to 31 December 2009, the loan extension also includes an event of default should MI-REIT fail to settle the 4A IBP acquisition in 4Q09.
This bank loan represents 91% of MI-REIT's total debt obligations.
MI-REIT faces strained financial flexibility as all its assets are encumbered, its banking relationships are limited, while it also lacks a strong sponsor. As a result, there is substantial near-term uncertainty as to whether it will be able to secure new funding to settle the asset acquisition.
The negative outlook reflects the high level of uncertainty over the trust's ability to fully address its financing/refinancing requirements by 4Q09.
The rating could be further downgraded if MI-REIT fails to make material progress in securing definitive financing for its asset acquisition and debt maturities over the next 3-6 months.
On the other hand, the rating may experience upward pressure if MI-REIT is able to substantially address its funding needs or recapitalize its balance sheet.
The last rating action was on 1 April, 2009, when MI-REIT's rating was downgraded to B2 and Moody's continued its review for further possible downgrade.
Headquartered in Singapore, MI-REIT is a real estate investment trust ("REIT") that owns and invests in a portfolio of industrial properties. The REIT reported investment property assets of approximately S$530 million as at 31 March 2009.