First REIT announces the acquisition of 2 properties:
- Mochtar Riady Comprehensive Cancer Centre (MRCCC) – SGD 170 mil
- Siloam Hospitals Lippo Cikarang (SHLC) – SGD 35 mil
This will be funded by issuing 345 mil shares for a gross proceed of SGD 172 mil and long term debt financing for SGD 50 mil
Rights Issue price will be SGD 0.50
Rights Ratio will be 5 for 4
Implied TERP – SGD 0.70 per unit
discount to TERP – 28.57%
discount to closing price – 47.37%
Based on a last closing price of SGD 0.98, the final number of shares will be roughly 619 mil compare to previous 274 mil. That’s a 125% increase in units.
The final price it should fall to will be SGD 0.70
The distributable income increases from 20 mil to 38.5 mil. That’s 92% increase.
Based on final price of SGD 0.70, your yield will be 8.83%. That’s quite a good yield.
Based on this financing, the debt to asset will increase from 14.5% to 17.7%. Still less than 20%
With an injection of (172+50 = 222mil) of assets yielding 18.5 mil more, these new assets yield for 8.1%. This yield is close to the current yield of 7.8% based on a share price of SGD 0.98.
The portfolio risk gets diversified across properties as well. But geographical risk still remains. for details on geographical risk do take a look at this article I written previously.
I think it’s a good deal. But take it like you are buying to new hospitals and renting it.
I will be going for the excess rights as well.
I run a free Singapore Dividend Stock Tracker available for everyone’s perusal. It contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly here.
- Cryptos are still very correlated with Equities for now. But what are the less correlated stuff? - January 23, 2022
- Why Would My Robo Cash Management Account Have Negative Returns? - January 22, 2022
- What Valuation Will Make Software/Tech Business Look Like Great Investments? - January 17, 2022