I recently received this question from a reader:

Hi FH

It’s my first time having to make a decision on a rights issue.

Are you able to share your thoughts on the rights issue for Keppel kbs reit?

For example, what are the possible thought process that an investor has to go through to make a decision for the rights issue of this reit? What is the possible rationale for the reit manager to issue the new shares at such a discount?

Thank you!

Absolutely fantastic question! Rights issues are a core part of REIT investing, and every REIT investor will need to address this question at some point in his investing career.

I will use Keppel KBS REIT as a case study here. Tam Ging Wien over at Probutterflyrecently penned an article on the Keppel-KBS REIT rights issue, and I thought it was very well done. I’ve shared it in full here with his permission, and I’ll share my thoughts on the decision making process below …