I think one of the largest shareholder of Saizen Reit (Argyle Street Management) is wrong in their opinion.  They lobbied for the management in the recently completed AGM, to disperse Saizen Reit’s huge cash reserves as dividend to “enhance” share holder’s value. The full write up on Strait Times can be found below. I don’t think that is the right call.

Why I think it is not a good idea? You have a dig a little deeper to understand their business model :

Saizen unique loan structure

Unlike other Singapore based Reits, Saizen Reits actually pays down the principles of their loan with each payment. I talked about this before here. What this means is that their repayment amount is higher thus less distribution for shareholder. But they make use of this arrangement to get more cheap cash to make up the actual distribution if they are not paying down ...