By Calvin Yeo (reproduced with permission from his blog www.investinpassiveincome.com)

There was an article published in Business Times a while back by The Hooi Ling titled ‘The REIT Myth Busted’. I read the article with great interest as I have significant holdings of REITs. Basically, the article is saying that if you held most of the Singapore REITs from day 1, you would have paid more for the rights issue than what you received from the dividends from the REIT.

It uses CapitaMall Trust in a hypothetical situation where the unit holder holds a unit of the REIT since IPO and subscribes to all the rights regardless of the subscription price and the reason for the rights issue. By the end of November 2011, the unit holder would have received $1,264 in dividends and paid $1,549 for rights subscription, a net cash outflow of $284 per lot. ...