facebookIf good REITs give rights issues, does it dilute the quality of the REIT? - Seedly

Anonymous

01 May 2020

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REITs

If good REITs give rights issues, does it dilute the quality of the REIT?

How does the REITs rights issue affect the REIT?

Discussion (2)

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Right issues are not necessarily bad. The key thing to note is the purpose, and whether they say it is yield accreditive (generates more income per share after issue) or yield dilution (reduces income per share after issue).

So yield accreditive = good
Dilution = bad

Generally good reits leave room in their debts / gearing and do not issue rights so often unless there is bargains to be found and they want to raise a lot of money quickly to fund the purchase.

I have taken advantage of rights issue of several reits in 2018 / 2019 to acquire more shares in the reits then I were to from the market.

Only bad management decisions etc capital allocation / tenant selection / contract structuring / asset recycling / negative-accretive asset allocation / absence of asset enhancement to stay relevant would affect the quality of REITs

Rights issues itself does not necessarily indicate of the quality of a REIT itself​​​

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