Sabana Shari'ah REIT

[valueinvestsg]

weak market, jialat DPU and crappy manager makes it quite a good offer..  

offer price near all time high
 
Especially, if you have shares, can buy 15-20% more at 0.42 now and tender to offer at 0.45.
 
From what i see, price can come down to 0.41 or lower after the offer as DPU is down quite alot.  Manager not interested to improve things.
 
Tendering all for now, finger crossed can get good allocation and buy back later at cheaper price

[mengtan333]

Thank you for sharing

My remisier and long term friend also advise me to buy 20% at the market price now by Tuesday 21Feb  and then tender 30-35% of my holdings for the 7-8% gain (11% if i include dividend)

or tender now, and buy the shares back later at the lower price if want to keep getting the dividend.
say DPU is falling which will also bring down share price

[ghchua]

Hi valueinvestsg,

offer price near all time high

I think you have mistaken. How could Sabana Reit all time high at 45cts only? You should look at its trading history. I believe that its all time high is more than $1.

Especially, if you have shares, can buy 15-20% more at 0.42 now and tender to offer at 0.45.
 
From what i see, price can come down to 0.41 or lower after the offer as DPU is down quite alot.  Manager not interested to improve things.

You are contradicting yourself. On one hand, you are saying buy more at 42cts now. On the other hand, you are saying that unit price might come down after the offer closes. If you think that the unit price might come down later, why buy more now? Just to tender your units to the partial offer? Do remember that not all your units will be taken up by the offeror if the offer is oversubscribed. Then what happened to the rest of your 15--20% more units plus your original holdings?

[ghchua]

Thank you for sharing

My remisier and long term friend also advise me to buy 20% at the market price now by Tuesday 21Feb  and then tender 30-35% of my holdings for the 7-8% gain (11% if i include dividend)

or tender now, and buy the shares back later at the lower price if want to keep getting the dividend.
say DPU is falling which will also bring down share price

Hi mengtan333,

I think this is a bad idea. If you think that the unit price will fall going forward and this is a bad REIT, the best thing to do is just to sell all your holdings now and move on. Full stop. 

Why bother yourself with the partial offer? The partial offer (though higher than the market price) will not take out all the units that you have. And adding to this uncertainty, you do not know how much beyond 10% of your units that you have tendered will be accepted. (if the offer turned unconditional, which is not at this moment).

However, if your view is that this REIT is ok to keep for the long term as it has value despite short term challenges, then it is a different thing altogether. 

Decide on your view on this REIT before even proceeding further.

[mengtan333]

Thanks for your thoughts and the comments

His rationale was that very likely 30-40% of the shareholders will not tender so its very likely upwards of 20-25% of all the shares you have will be successfully tendered at 45 cents which is a high and good price in this market.

So tendering 40% and then buy back what was successfully tendered at a lower price

or buying the 20-25% at 42 cents and then tendering it out.

Both he say earn a quick 7-8% instead of not doing anything

[mengtan333]

While i think long term sabana reit should be okay.

short term looks quite challenging. Manager not capable of handling the interest rate and ocuppancy problem well and DPU has gone down and we are going into softer rental market.

thoughts is that the price will linger around the 41-42 cents level for some time.

That's why my thoughts on tendering 40% as well now

[ghchua]

Hi mengtan333,

So you have a view that Sabana Reit will be ok in the long run. Great! Then we can discuss further.

His rationale was that very likely 30-40% of the shareholders will not tender so its very likely upwards of 20-25% of all the shares you have will be successfully tendered at 45 cents which is a high and good price in this market.

I dunno where your remisier got this idea from. So far, there is no single unitholder that came out and say that they will not accept the partial offer outright. So, some unitholders might not take up all their 10%, but you cannot say they won't tender 0.1% to 9.9% of their holdings. Even if some unitholders didn't tender any units, you cannot stop another unitholder tendering 100% of his units. Also, some might buy from the market at 42c and tender everything to the offeror. There is so many combinations going around.

So tendering 40% and then buy back what was successfully tendered at a lower price

This strategy is ok, since you are holding the Reit at this moment and you wish to tender 40% of your current holdings to the partial offer, while attempting to buy back them back at a lower price after the partial offer closes. As I said before, since you have a view on the Reit for long term holding, you should also be mindful that you might suffer short term capital loss for your remaining 60% of the Reit and also some of the 40% of your holdings that you tendered that might not be taken up by the offeror.

or buying the 20-25% at 42 cents and then tendering it out.

This is a bad idea. Because by buying 20-25% more at 42c currently, you are actually increasing your stake in the Reit. You hope that all that you have bought and tendered will be taken up by the offeror. Otherwise, you might suffer capital loss for 100% of your existing holdings plus some of the additional 20-25% more that you have bought, if the unit price drops further after the partial offer closes.

Both he say earn a quick 7-8% instead of not doing anything

This is incorrect. it is 7-8% realized gain is for those units that you have successfully tendered to the offeror via the partial offer. You might suffer capital loss for your existing holdings plus some of those tendered units that are not taken up by the offeror. So, total return is actually unknown at this moment. By total return, what I meant is realized and unrealized returns.

By not doing anything, those unitholders also have a view. They have a view that the Reit will trade above the partial offer price after the offer closes. That's why they are not doing anything. You also cannot rule that out. Anything is possible.

PS: You might wish to take up the scrip dividend at 42c, since your intention is to tender some of your units via the partial offer.

[Pablo66]

While i think long term sabana reit should be okay.

short term looks quite challenging. Manager not capable of handling the interest rate and ocuppancy problem well and DPU has gone down and we are going into softer rental market.

thoughts is that the price will linger around the 41-42 cents level for some time.

That's why my thoughts on tendering 40% as well now

Not sure about long-term. Management is just baaaaad. Tendering most of my shares.

[weijian]

It is obvious who has more skin in the game. Directors themselves or real shareholders.

Quarz urges Sabana Reit not to ‘waste money’ on IFA for Volare partial offer

Under the Takeover Code, there is no requirement for the directors to obtain competent independent advice if a partial offer does not result in the offeror and its concert parties holding 30 per cent or more in the offeree.

Asked by The Business Times if Quarz would accept Volare’s partial offer, head of research Havard Chi would only say that it finds the offer “attractive”.

https://www.businesstimes.com.sg/compani...tial-offer

[ghchua]

It is obvious who has more skin in the game. Directors themselves or real shareholders.

Hi weijian,

I think having an IFA is useful for this partial offer, even if the takeover code doesn't requires it. It helps minority unitholders to make an informed decision based on another lens, other than from the offeror. And it is unfair to compare it with a previous offer two years ago, as things might have changed since then.

Also, do take note that the mechanics of a partial offer and a full general offer is not the same. Having an IFA opinion on this helps in a certain extent.

Though Quarz might have some valid reasons for voicing their concerns, my point is why they come out now and say this? They could have voice it out earlier. By now, I think they are already in the process or maybe even finalizing the appointment of an IFA. It might be too late to change track.