First REIT Announces Acquisition and Rights Issue Skip to Content

First REIT Announces Acquisition and Rights Issue

First REIT announces the acquisition of 2 properties:

  1. Mochtar Riady Comprehensive Cancer Centre (MRCCC) – SGD 170 mil
  2. 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%

My Assessment

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.

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Jlee

Friday 10th of December 2010

Hi, any idea any First Reits drop so fast recently after the rights issue? Thks

Drizzt

Friday 10th of December 2010

there is a big sell transaction by Golden Rainbow fund. likely the cause.

dunksg

Sunday 5th of December 2010

hi Drizzt, apologies, it doesn't state when do we get to make payment of the $0.50 for each share. to date i've not received anything from FIRT yet. Do you know when we will need to pay for your rights shares? - or will that only come after XR, or rights trading period? Thanks once again...

dunksg

Sunday 5th of December 2010

hi Drizzt, thanks for the details! Regards, d

Drizzt

Sunday 5th of December 2010

no probs. i also havent received anything. i think if you check with others they will say the same. perhaps check at the atm see if there are options there already.

dunksg

Thursday 2nd of December 2010

hi guys, just wondering if you know when is the last day for rights subscription (via atm or otherwise?) - reason being i am overseas right now, and will be for next couple of days, and think that i might must the opportunity to apply! - which of course you know is a BIG waste! - thanks guys!

Drizzt

Friday 3rd of December 2010

hi duncan, you can check out the important dates here http://drizzt-menzoberranzan.blogspot.com/2010/11/important-dates-for-first-reit-rights.html

QF

Thursday 2nd of December 2010

Hi.. can anyone advise if the rights can be subscribed through internet banking? I bought first reits by cpf. Wondering how to subscribe the rights through cpf investment account.

Drizzt

Thursday 2nd of December 2010

hmm you can do it via ATM if i am correct i have never subscribe to rights issues via ib.

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