Sabana Shari'ah REIT

as sabana's gearing goes to 40%, any further acquisition may need to be funded by a rights issue
would that hurt shareholders? if a right issue of say 80-90 cents does come within the next 12 months?

(05-09-2013, 06:05 PM)felixleong Wrote: as sabana's gearing goes to 40%, any further acquisition may need to be funded by a rights issue
would that hurt shareholders? if a right issue of say 80-90 cents does come within the next 12 months?

Agree that rights at a steep discount is also detrimental to shareholder, I do not know how the rights by sabana if any will be like, will reserve judgement till then. But on the same vein, soilbuild management that comes across as opportunistic, given they delist soilbuild and relist as a different entity with different asset base and get away with plenty of money ( check out greengirraffe post) and then the reits generous fees structure. IIRC, ( can't remember details, do point out my mistakes), industrial park suffered the highest vacancy and lowest rate during the worst years, think its URA data, also 1/3 to 1/2 of sabana properties do not need to pay land rent, whereas soilbuild industrial park and subjected to land rent payable to JTC. I can't remember soilbuild loans are fixed or floated Liao. Think this is one of the factors affecting my decision. Every REIT will come a point whereby rights is needed to further growth, that itself is not a problem if acquisition is yield acreditive and the discount to market price reasonable. How to guard against highly discount rights? Think it will boil down to management again. I like sabana acquisitions since IPO, with yield of 6-7% if u consider the new chai Chee buy, then it should be 5% to 9%. After looking at the pay structure of soilbuild and dun feel the need to check their yield of the 4 or 5 buy just Pre IPO. That will give some sense if they do search for value

i love rights issue of any company. This is always an opportunity for you to "tikam". And may be one of the best time to buy into a company.

Management Integrity is important. If you got bitten once, and you make the mistake again, this is greed.
We also need to avoid motivation that gives higher paycheck to the manager at investor higher risk expense.

(06-09-2013, 11:43 AM)corydorus Wrote: Management Integrity is important. If you got bitten once, and you make the mistake again, this is greed.
We also need to avoid motivation that gives higher paycheck to the manager at investor higher risk expense.

Yes! In fact over-all, Management or who are the business owners is top priority to consider before going further. But sometimes going against investing principles just for "tikam"--high yield ma. A little greed i think is still O. K. if the stake is affordable. But after HONGX, i think thrice. HongX was too much greed already.

In the last AGM that I have attended, I have spoken with the management. The management's preference is to raise funds for property acquisition from institutional investors where time is of the essence.

thanks for the info, I think placement from institutional investors would be best for shareholders

Why? That will dilute the existing shareholder holding. For me, I will prefer a rights issue where every existing shareholder will have a choice to participate.

lets say an investor previously bought 10 lots of sabana at $1.00, the current price is around $1.14
the current yield is around 8.5%

sabana makes an acquisition on a new industrial property paying 8.5% too

would he prefer sabana do to a placement at $1.10 to other investors
or would he prefer sabana to do a rights issue at $1.05 and pay for it himself?


what would be the case like if the investor's purchase price for sabana was $1.20 instead?

(08-09-2013, 11:21 AM)felixleong Wrote: lets say an investor previously bought 10 lots of sabana at $1.00, the current price is around $1.14
the current yield is around 8.5%

sabana makes an acquisition on a new industrial property paying 8.5% too

would he prefer sabana do to a placement at $1.10 to other investors
or would he prefer sabana to do a rights issue at $1.05 and pay for it himself?


what would be the case like if the investor's purchase price for sabana was $1.20 instead?

you can't base your investment to past price. Yield and dilution is about current not past.