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OUE Commercial REIT Rights Issue – Very Very Very Bad Deal
By KPO and CZM  •  September 14, 2018
If you are an existing shareholder, you should be aware of the proposed acquisition of the office components of OUE Downtown. You might be aware that I actually do like rights issue as they present an opportunity to accumulate more shares at a lower price. However, I have sold all my OUE Commercial REIT today (8,000 units @ $0.605) and these are the reasons why I will not be participating this extremely bad deal (at least for my case).


Some important numbers to take note:
- 83 rights units for every 100 existing units
- issue price of $0.456
- TERP of $0.570
- Pro Forma DPU of $0.0354 vs Current DPU of $0.0467
- Pro Forma NAV of $0.70 vs Current NAV of $0.91
My average price was $0.70 and before the rights issue, the yield on cost was around 6.67% and with a NAV of $0.91, it was trading at >20% discount....
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By KPO and CZM
I am Ong and my fiancee (Chan Zui Mao a.k.a CMZ) calls me a Kiam Pok (i.e. stingy/thrifty depending on how you look at it). Hence, the nickname KPO (Kiam Pok Ong). We have decided to name the blog KPO because I have proposed to CMZ successfully and she is officially a KPO too. The purpose of the blog is to list down all the money-saving tips, our investment/journey to financial freedom and to document my life with CZM.
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2 Comments

2 responses to “OUE Commercial REIT Rights Issue – Very Very Very Bad Deal”

  1. Pythia says:

    This is a problem with the smaller REITs, as soon as they acquire another building they have a high chance of needing to raise equity. Bigger ones can often buy a few properties just by adding a bit of debt.

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