For existing shareholders of SBREIT, is it worth considering the
offer based on the following extracted info?
Soilbuild Business Space REIT’s (SBREIT) announced a non-renounceable preferential offering of 192,135,040 new units at an issue price of S$0.530 on the basis of 18 new units for 100 existing units. The offer price represents an 8.6% discount to 21 Aug’s close price. SBREIT plans to raise gross proceeds of approximately S$101.8m to fund the proposed acquisition of a property in Adelaide, Australia. Investors on SBREIT’s books as of 29 August are eligible for the offering which opens from 3rd to 11th September. The acquisition is expected to be DPU dilutive, with pro-forma FY18/1HFY19 DPU to fall 3.3% and 2.4% respectively, assuming 74% equity and 26% debt mix for the preferential offering of S$101.8m. Post-acquisition gearing is expected to fall from 39.4% to 38.3%. Management sees the proposed acquisition as an opportunity to deepen SBREIT’s presence in the attractive Australia office market and to increase diversification of SBREIT’s portfolio. Prior to this development, we had a HOLD rating and fair value estimate of S$0.60
In general I would think you’d need to look at the fundamentals as well as determine if you believe this acquisition will be yield accretive for SBREIT or not.
Personally, I am looking at taking up the preferential offering.
I dumped this counter. Been looking to dump, but not willing to given capital losses barely covered by dividends. DPU declining year on year, manager not proactive in recycling capital and working the capital harder. This acquisition is the last straw. Not even DPU accretive, had difficulty with private placements, no debt headway available to finance the acquisition. I cut losses and dumped it all, not to mention the PO.
The issue price is S$0.530. SV3U has declined %6.13 last 2 days. Based on the last closing price of $0.545, the discount is only %2.8…
Applications close 13 days later on 11 Sep. There are chances that the stock price can drop below the issue price. Or am I wrong? Probably I will wait until the last day to see how it goes.
On the other hand, considering the almost 40% decline in AUD/SGD in the last 10 years, timing might be right to get into the Australian property market that got corrected last 2-3 years. The new property is a multi-tenanted freehold Grade A office.
I’ve lapsed my preferential offering reason being the price is not discounted much at all. Soon I’ve read this :
** A rights issue, as its name suggests, means that the existing shareholder is issued a right to buy the new shares at a discounted price. There are two types of rights issue, renounceable and non-renounceable.
In the case of a renounceable rights issue, the existing shareholder has a choice of renouncing that right and selling that right to a third party (could even be someone who is not an existing shareholder).
A non-renounceable rights issue will not allow the existing shareholder to sell the right to anyone else. He only has two choices, to buy the discounted shares or not to buy them.
So the SBREIT is non-renounceable preferential offering…so I can’t sell it at the open market for a profit to offset some of my capital lost. Am I right??? Please share.