Reits look good, for now

[brattzz]

"So nice isn't it? The formula is perfect.
1) Bid for the land.
2) Construct the property
3) Dump the property at high valuation to REITs and get back the money.
4) Go to step 1."

This formula works well in land shortage singapore!

[koh_52]

Oh! another type of business model like metro holdings, acquire a property using share-holder fund.
Each time sold off the shopping centre, their MD will get a big fat bonus, share holder dividend pay peanuts....hmms, dat why want to make big buck venture into business.

In property investment, you manage and control your own financial aspect be it income or expenses...at least you are in control of your own money.

[sgd]

Yes there's always such problem isn't it the company could be doing really very well but the bigger shareholders may not always play by the rules why? because it's so excellent they want it for themselves so play this kind games make people fed up and give up so they can buy it back for themselves and there's very little one can do about it.

Managing your own property depending on what it is. It if is commercial unit like shops inside a building there could be other problems too. After a few years facilities get old and need upgrade or paint job. The developer who is usually the one who owns the most units may not want to do any upgrading since there are other shop owners other than himself and there are games they will play also. So managing your own property also may have it's own challenges.

That's why I prefer to invest in property reits as by law pay out much of their earnings not because they want to but have to in order to avoid paying taxes.

[newborn1000]

Singapore, 29 November 2010 , ARA Trust Management (Suntec) Limited, as manager of Suntec
REIT (the "Manager"), is pleased to announce that the private placement of 313 million new units in
Suntec REIT ("New Units", and the private placement of New Units, the "Private Placement") have
been fully subscribed at an issue price of S$1.37 per New Unit (the "Issue Price"). The Issue Price
represents a discount of 4.02% to the volume weighted average price of S$1.4274 per unit in Suntec
REIT ("Unit") and 2.88% to the adjusted volume weighted average price1 of S$1.4106 per Unit for
trades done for the full market day on 26 November 2010.
The net proceeds from the Private Placement which amount to approximately S$417.9 million will be
used to partially finance the acquisition of a one-third interest in Marina Bay Financial Centre Towers 1
and 2 and the Marina Bay Link Mall (the "Acquisition"). The Manager has on 26 November 2010
obtained the approval of unitholders of Suntec REIT ("Unitholders") at an extraordinary general
meeting for the Acquisition.
Mr. Yeo See Kiat, Chief Executive Officer of the Manager, said, "We are delighted to receive such a
strong response for the Private Placement priced at a tight discount of 2.88% to the adjusted volume
weighted average price, following an accelerated book building process today."



Dont really like Reits, see the above, just the tip of the iceberg of private placement

Sometimes, they get a private placement without buying anything.......

So, not my cup of tea.........

[Drizzt]

actually my encounter with private placement is much less. does private placement dilutes retail shareholders?

[EnSabahNur]

Yes, by the fact that it is offered to a select group of investors, and not offered to all shareholders at a preset ratio, it will be dilutive.

[newborn1000]

I like companies that does share buy backs.......so you will notice lesser weighted average of shares over time.......

But if your company does private placement instead, you will see the weighted average going up

[Nick]

Sometimes placement is a good thing...if the company is using its over-valued shares (higher PE) as currency to pay for an acquisition of an under-valued company (lower PE), it is both earning and NAV accretive ?

[Blackjack]

Private placement need not necessarily be a bad thing right? Even if it may be dilutive to earnings.

Sometimes placement can be made to strategic partners, in which case, should even be better than when no placement was made.

My view's that be it a private placement or issue of rights, the basic tenet is that the company should be making better use of the cash in hand, all things equal, would be stronger than it was prior to the cash call, hence technically it should translate to shareholders having a stake in a stronger company?

If shareholders do not view the benefits of the call to be favourable in the first place, then any sort of equity raising or even taking of debt should be undesirable whether it is dilutive or not.

At the end of the day, it boils down to the perception of competence of the management whether any form of placement or rights issue is considered good or bad. The term 'dilutive' seems to give a negative connotation regardless?

[momoeagle]

If you are buying for an ownership of the company, it is dilutive.
If you are buying for the sake of distributions, and if the placements do not change the share price much nor change your distribution much, then it is no problems.

So it really depends on the person