Back in 2014, when OUE C-REIT had its IPO, I warned that its gearing was too high and its distribution yield (which was financially engineered to be higher through income support given by the sponsor) was too low given its IPO price of 80c a unit. The IPO was a good deal for OUE Limited.
Investing in REITs, we should be prepared for fund raising because they distribute most of their income to their investors. When a REIT raises funds, we have to question their reason for doing so.
If it is to invest in yield accretive assets, it is a good thing. Regular readers of my blog would be familiar with the argument that not all rights issues are bad.
In this instance, OUE C-REIT is placing out new shares at 64.3c a unit (which is some 20% lower than its IPO price) …Read the full article →