Sabana REIT announced over the weekend three new property acquisitions followed by a Rights Issue exercise to fund the purchases. The REIT will issue 42 rights for every 100 existing shares. The issue price of each new share is $0.258 which represents a 49% discount to the closing price of $0.505 on 19 Dec. The TERP (Theoretical Ex-Rights Price) is said to be $0.432.
Raising of funds via Rights issue is quite the norm. But in this case the management did not disclose if the acquisitions are yield accretive. In the event that they are not, DPU will be greatly diluted and trigger a price drop.
I quickly sold my small holding in the morning at $0.495. The share closed 10% down at $0.45. Looks like market assessment is also not favourable. My small foray into this counter which was made back in June, thus ended with a three digit loss.
A reluctant investor from S'pore 