[Official] REITs CD tracking thread

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Denikeve

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I'm continuing to average down sabana and MLT before CD date...don't bear to sell it...though both are still killing me softly...
 
winguy

winguy

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Have a qn for reits experts. What good does DRP do? Mathematically it is diluting dpu to some extent. So qn is what are the managers doing with the $ from drp? If not doing anything yield accretive, isnt the dpu just going to dilute further?
E.g. mlt just said drp is a factor in drop in dpu. So what are the managers doing to offset it?
 
havetheveryfun

havetheveryfun

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winguy said:
Have a qn for reits experts. What good does DRP do? Mathematically it is diluting dpu to some extent. So qn is what are the managers doing with the $ from drp? If not doing anything yield accretive, isnt the dpu just going to dilute further?
E.g. mlt just said drp is a factor in drop in dpu. So what are the managers doing to offset it?
Click to expand...

they offset it by using the $ they retain to increase the overall DPU again

With DRP, they get to retain a bit of cash as they give out extra shares instead of $. Then they use the cash they retain to acquire new properties, renovate existing properties, etc to increase the overall DPU again. After all REITS are supposed to pay out 90% of their earnings so it is just one way for them to retain cash (or get more cash) apart from rights issue, etc...

Just my noob 2 cents from what I have read, may not be completely right though.
 
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Jazzbie

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I think MLT results look solid with good NPI growth moving forward. Interested to vest in this bluechip industrial REIT. Just probably think it may be a better to go in after XD esp if the price goes up more during CD period.
 
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Red_Cheesepie

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havetheveryfun said:
they offset it by using the $ they retain to increase the overall DPU again

With DRP, they get to retain a bit of cash as they give out extra shares instead of $. Then they use the cash they retain to acquire new properties, renovate existing properties, etc to increase the overall DPU again. After all REITS are supposed to pay out 90% of their earnings so it is just one way for them to retain cash (or get more cash) apart from rights issue, etc...

Just my noob 2 cents from what I have read, may not be completely right though.
Click to expand...

They give you same value of cash in shares. You opt for DRP, you get more shares, they keep more cash. If you opt for cash, you use the cash to buy their shares again as investment, they get more cash, you get more shares. But DRP shares maybe cheaper than market price and hence able to get more shares as compared to buying in the market. and buying in market need to pay commission again bringing the average cost per share up for you as an investor. From retail investor point of view. If from REIT point of view, the explanation above seems right.
 
Paul Lee

Paul Lee

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Red_Cheesepie said:
If you opt for cash, you use the cash to buy their shares again as investment, they get more cash, you get more shares.
Click to expand...

This is not right. :s22:

If you keep the cash to buy more units from the open market, the REIT get nothing. But the one who owns the units that sell it to you will get the money.
 
havetheveryfun

havetheveryfun

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Red_Cheesepie said:
They give you same value of cash in shares. You opt for DRP, you get more shares, they keep more cash. If you opt for cash, you use the cash to buy their shares again as investment, they get more cash, you get more shares. But DRP shares maybe cheaper than market price and hence able to get more shares as compared to buying in the market. and buying in market need to pay commission again bringing the average cost per share up for you as an investor. From retail investor point of view. If from REIT point of view, the explanation above seems right.
Click to expand...

To me, DRP is actually a 2 way street, you get shares at a lower price because you expect the coy will do well and increase the share price compared to now (banks like OCBC are a better example for this, even with DRP the share price still doesn't tank that much)

actually u can just read up any of the coys DRP plans to know what it is actually used for:

http://saizenreit.com.sg/wp-content...aizen-REIT-Distribution-Reinvestment-Plan.pdf

  • Cash retained may be used to manage the regular principal
    repayment obligations of Saizen REIT’s long-term loans
  • For 1H FY2015, the use of capital cash resources to offset loan principal
    repayment contributed to 1.39 cents out of the DPU of 3.10 cents
  • It is Saizen REIT’s intention to utilise, when possible, undeployed capital
    resources to offset loan principal repayments, thereby effectively making
    available operational cash for distributions
  • More flexibility in capital management
  • Allows Unitholders to acquire additional Units without having to
    incur transaction or other related costs
  • Unitholders can choose to receive a combination of fully-paid
    units and cash
  • Unitholders may elect to receive a portion of the distribution in cash to
    avoid receiving odd-lots
  • Alternatively, Unitholders who receive odd lots of Units under the DRP and
    who wish to trade such odd lots on the SGX-ST should do so on the Unit
    Share Market, which allows trading of odd lots with a minimum of one Unit
  •  Enlarges Saizen REIT’s capital base, strengthens working
    capital reserves and improves the liquidity of the Units
 
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winorlose

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Today last minute queued for MIT @ 1.50 but didn't get match.

Their results seems decent with increased DPU.
 
Dyhalt

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DRP is just an option for you to increase your investment to that particular REITs at slightly favorable cost.

In my humble opinion if DRP is yield accretive in long run, then it is good to subscribe (which in most cases isn't). Example of yield accretive is to buy a property、 some asset enhancement investments (AEI) etc.

For all other reasons, you should take it with a grain of salt. For example Saizen Reits, its DRP and unit buyback plan is contradictory in nature, so as an investor you should consider the pros & cons before making the decisions for yourself.
 
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