Some time back, I wrote about how perpetual bonds could be a good thing for REITs if they could use the funds raised to acquire yield accretive properties. Imagine borrowing at a lower interest rate to invest in a property with a NPI yield higher than the cost of debt. This is good news for existing unitholders.
Sabana REIT has announced a Convertible Sukuk which will raise S$80m. What is Sukuk? The easiest way to understand it is to think of it as an Islamic Bond. So, a Convertible Sukuk is a Convertible Bond.
The Sukuk will carry a profit rate of 4.5% and are due in September 2012. If the conversion to new units takes place, there will be 67,040,979 new units issued (about 10.5% of all units currently in issue).
Read announcement: here.
Sukuk holders could exercise the option to convert to new units after 9 November 2012. ......