First REIT Announces Acquisition and Rights Issue

Say, how does the right issue works? Can i sell the rights on open market? Does it have any exercise price like a warrant? Any expiry?

So what if I subscribe to the rights, then will it automatically be converted into shares?

Thanks…

you can sell the rights once it goes extrights. the price should be around 28 cents. this is if you dun want to subscribe to the rights.

if you subscribe you will eventually get that 28 cents alloted worth of shares.

y is it 28 cents? I tot it should be 50 cents?

when will the rights be converted to shares?

Do correct me if I am wrong…

a) if i subscribe for 5000 rights, pay these at 50c/share, then i will get 5000 of first reit rite?

b) if i transact off the open market (presumably i do not own any first reit prior to ex rights date), each rights i bot will be exchange for a first reit unit rite?

c) I still do not understand y each right is 28c while they say they are worth 50c. is it because 98c (ytd closing) – 70c (theoretical ex rights price) = 28c?

d) Does that mean i will get the 28c worth of rights for free and either I have to sell it in the market or I will have to subscribe it for 50c to exchange for new first reit units upon expiry?

e) I’m not making sense rite?

WK,

Let me try to answer your question.

a) Yes, you will get 5k FR if you subscribe for 5k rights and pay 50c/share.

b) Yes.

c) 50c is right exercise price, not right mkt price.

Mkt price of rights is driven by mkt at the time of rights trading.
On theory, the formula is
Mkt Price of right = Mother share price after XR – right exercise price

Eg. if FR is traded at 70c after XR, the right should be worth 20c. This is because you still need to pay 50c to excercise the right.

Hence if FR is traded at 80c after XR, the right price will be 30c.

d)If you own FR now, after XR, you have 3 options.
i) Sell the rights when it is listed.
ii) Excercise it when receive the exercise notice
iii) Do nothing.

thanks william for the explanation. that sums up my thoughts exactly.

But since they are offering 5:4, dun u think the rights will be traded lower rather base on your formula;

mkt price of right = after xr – exercise price

or should it be

mkt price of right = (after xr – exercise price) x 4/5

since they are giving out 125% more… so everybody will b selling upon the right listing (if price of right r base on your formula)…

any idea when it fr will b x n when rights b listed & its last trading day?

Hi,

The nil paid rights will be traded at market price of mother share (after XR) – 0.50. If the nil paid rights is traded at lower than this value, pple will buy up the rights cos it’s cheaper. If the nil paid rights is traded higher than the mother share, pple will buy the mother share cos it’s cheaper.

So what’s the market price of the mother share after xr? Say the last close is 0.98. Every 4 shares of mother share at CR will get you 5 shares of rights at 0.50, hence it’s

(0.98×4 + 0.50×5)/9 = 0.713

Feel free to change accordingly as the price of the last close changes.

Price of rights will then be 0.713 – 0.5 = 0.213.

Since the smallest bid is 0.005, it’ll be at 0.215 at the opening at XR. I think it’s more impt to look at the last day of CR to determine the closing price in order to calculate the opening price of the mother share upon XR, and hence the market price of the nil paid rights.

When will be the nil paid rights trading period? Aiyo, relax lah, wait for the offer information statement (OIS) to be sent to you. All will be found there.

[...] Yesterday I updated that First REIT will be doing a 5 for 4 rights issue to fund the purchase of 2 indonesian hospitals. [...]

i think alot of people are excited or anxious because its a freaking 5 for 4 issue! lots of decision required.

for folks interested in understanding abit on the 15 year lease you can check out what i asked the investor relations >> http://www.investmentmoats.com/money-management/reit/first-reits-short-operating-lease-explained/

correction to the link above : http://www.investmentmoats.com/money-management/reit/first-reits-short-operating-lease-explained/

I believe that accepting and paying for the rights is the thing to do. It could lead to capital gains as I explained in my blog.

hi, how do we exercise our rights? through our broker or there is form that we have to fill up? will they send us any form or what? sorry i new to this, so i m kinda of confuse

You will receive a form on this. As the choices to indicate how much you wanna exercise, tt will depend.

My only past experience with AIMReit is either send form back to CDP with money order or thru ATM.

thank you very much =)

internet banking can ah?

announcements already out… so i m not that blur already…

Hi,

This is my first time and I don’t know about rights issue.

Is it calculated as below?

(First Reit Rights) 5 for 4 at $0.50 Profit
$0.96 (Bought Price) 20000 $19,200
$0.50 (Rights Price) 25000 $12,500
$0.70 (Price @XD) 45000 $31,700

Profit : (Assume 0.90 – 0.70)* 45000 = $8280

Is it this way?

hi LT76, you dont really get a profit if you are an existing shareholders, you just get more units if you choose to fully subscirbe to all the rights. however, it if u decide to sell it off ex-rights you end up sort of liquidating part of your position

are you vested in the first place?

Hi,

I am not vested yet but was intrested. So let say if i get 4 lots at 0.95 now and received 5 rights. If i exercise all my rights my avg price will be 0.7 for 9 lots?? and my yeild will be 9.18% base on annualised DPU of 7.62c??

the price will flutuate around 70 cents or so. the dividend should be lower since the prevailing yield is around 8% plus as well.

hi, i will be selling 50% of my rights to fund the purchase of the remaining 50%.

Commencement of “nil-paid” rights trading period is 8 Dec,
Close of “nil-paid” rights trading period is 16 Dec and
Close of the Rights Issue is 22 Dec.

My question is : If i sell 50% of my rights on the first trading day, will I be able to receive the funds from my rights sale in time to make the purchase for the remaining rights ?

that i will not know demio. i suggest that you have adequate funds for this because i have not read the actual rights documents yet.

thanks Drizzt.i hope to buy a much a i can but too bad had only a limited fund. I had posted this question to First Reits and hopefully i can have the answer soon. will update again!

no probs demio. looking forward to your updates

Can you furnish me with the essential dates relevant to the rights issue?

I understand that if i buy FR shares now, they will be CR. When are the exact dates for XR, and the dates for exercising the rights etc…

Thanks Drizzt!

Hi Demio,

Another suggestion, after xr, sell off some of your FR to finance your rights purchase. Since after XR, you will be entitled to the full allocation of rights (based on book closure date, if not wrong 3rd Dec). You may wanna work out which gives you better return. (coz selling off 50% rights surly cant let you exercise 50% rights).

[...] First REIT is currently cum Rights and you can read about a detail discussion in this topic here. [...]

[...] it is to my surprise that for their rights issue to purchase 2 more hospitals, their circular release is so comprehensive that you can get an education of the healthcare sector [...]

Hi,

If i am a shareholder now but do nothing because of ignorant about this 5 for 4 right issues, and considering the mother share of 0.7X after x-right, that means i stand to lose current share price – price after x?? That is a very bad thing, isn’t it?

2. Currently, the dividend pay per lot is about $19, is it expected to be lower in the next dividend payout after this right issues?? Assuming a yield of 8++%, does that mean after this, the dividend per lot will be around $8.4. So again if i do nothing due to ignorant during this right exercise, i am losing not just the share price difference, but also the future dividend payout!!?

an additional question,

Assuming i am correct in the above, if i decided to sell my rights, assuming 25cents, i will be losing again in terms of future dividends payout since i am still holding the same number of shares??

you have to be aware of this rights issue and subscribe to this rights. if not you will watch your capital go down the drain.you will lose out on the 5 share worth 70 cent each likely if you are ignorant.

Hi Drizzt, how to calculate the expected/estimated dividend per share per annum after this exercise?

hi suhing, i actually didn’t! that is the figure provided by first reit and its probably an estimate.

Hi,

Can anyone advise if the RIGHTS can be subscribed through ATM instead of the proxy form?
N the last dates to subscribe to the RIGHTs?

Thanks..

Hi aloy,

I can answer for Drizzt. The rights can be applied thru atm, which is much easier compared to the proxy form because of the payment issue. Just got to atm and you can subscribe to the right entitled and for any excess rights you wish to subscribe.

As for the last day to subscribe, you might have to wait for the offer information statement (OIS) to be delivered to you. It’s still early lah.

Hi,
Thanks for clarifying..
Glad I did not missed the date for the subscription..

Thanks La papillion for providing the information

Has the rights subscription commenced already? I have not receive any proxy form nor does my CDP account shows any eligible rights for First Reit.

5 for 4 means one can subscribe to 5 shares for every 4 owned shares right? eg if one has 1000 shares, can subscribe to 1250 shares?

Hi.. can anyone advise if the rights can be subscribed through internet banking? I bought first reits by cpf. Wondering how to subscribe the rights through cpf investment account.

hmm you can do it via ATM if i am correct i have never subscribe to rights issues via ib.

hi guys, just wondering if you know when is the last day for rights subscription (via atm or otherwise?) – reason being i am overseas right now, and will be for next couple of days, and think that i might must the opportunity to apply! – which of course you know is a BIG waste! – thanks guys!

hi duncan, you can check out the important dates here http://drizzt-menzoberranzan.blogspot.com/2010/11/important-dates-for-first-reit-rights.html

hi Drizzt, thanks for the details! Regards, d

hi Drizzt, apologies, it doesn’t state when do we get to make payment of the $0.50 for each share. to date i’ve not received anything from FIRT yet. Do you know when we will need to pay for your rights shares? – or will that only come after XR, or rights trading period? Thanks once again…

no probs. i also havent received anything. i think if you check with others they will say the same. perhaps check at the atm see if there are options there already.

[...] dunno why the hardcopy documents take so long to reached investors. Many investors at my initial discussion on First REITs rights issue have been raising this [...]

Hi, any idea any First Reits drop so fast recently after the rights issue? Thks

there is a big sell transaction by Golden Rainbow fund. likely the cause.

[...] Folks following this blog would know that I applied for First REIT 5 for 4 rights issue. [...]