Yes, but a slow process.

Eg.
ABC reit asset size or NAV is 100 million
Gearing ratio 40%, means 40 million is borrowed

Let say its yield is 6%, means 6 million DPU, retain 10% = 600K pa.

The most ABC reit can pare down is 600K pa vs existing 40 mil borrowing.

At this market situation, highly unlikely it will go back to 1.90. 1.99 is possible, weeks ago , it was around 1.95~1.96 level, before releasing the latest Q.
Its latest stable Q DPU provides some support level around 2.00.

1.90 may need some major market sell down.

FLT has some mini sell down, due to poor China trade data?

I have a different view.
Bonus shares doesn't create any value.

Instead of keep the residual profit made as retained earning, now the retained earning being converted to paid up capital or bonus shares.
The value of company doesn't change with bonus issue, just shareholders get extra share in hand.
While the extra shares will dilute existing DPU.
So it is back to square one.

I would prefer the retained earning being converted dividend instead of bonus shares, aka nothing beat hard cash in hand, and cash in hand can have compounded effect.
More dividend, higher yield.
Investors see higher yield then more support share price or share price is at a more elevated level.

There is a difference between share split vs bonus issue.

1. Share split -
Just divide the share from 1 to 2, and par value from $1 to RM0.50
100 million shares par value $1 = 200 million shares par value $0.50
Can do anytimes at company wish, doesn't need to look at account book retained earning.

The number of shares just increased.

Bonus -
A new share being issued with the utlisation of retained earning, (nothing to do or not necessary must be in the form cash)
Retained earning being capitalised into paid up capital.
So must have retained earning, or share premium account (if)

Existing 100 mil shares par value $1, if issue 20% bonus, then total 120 mil par value $1 issued.
Then deduct retained earning $20 mil.

Both in the end of days, no extra value being created.
1. Absolute the same

2. In term of shareholders pov, nothing change. But in term of accounting, yes.

Dividend only can be distributed if there is retained earning.
If the retained earning being capitalised into paid up capital, then those amount cannot be distributed as dividend already, aka it becomes tight to the paid up capital.

This post has been edited by cherroy: Aug 17 2017, 11:26 AM

You don't need "cash in hand" to issue bonus shares, as long as you have sufficient retained earning or share premium account to offset the capitalisation of the bonus issue, then company can issue already.

It is a non-cash involved activities, or specifically just an accounting adjustment which involved the paid up capital.

The bonus issue is creating no extra value for shareholder nor increase the company value directly.
But it does increases the liquidity in the stock market, this is the main benefit of having bonus issue.

The main purpose of having bonus issue is
1. Increase paid up capital - this particular useful for relative smaller company, while for large company, paid up capital of 5 bil or 6 bil, it makes little different already.
2. Increase liquidity.

I don't follow what is happening on the particular company.
But I don't know how a company can issue bonus issue without capitalisation from either retained earning or share premium account.

Wish to know how to do it as well to improve my knowledge on this field.

With stock split or without (as well as bonus shares), it doesn't differ at all.

If a company is earning good, stock split/bonus share or not, it doesn't make a different on dividend shareholders will receive, shareholders still get good dividend if company earns good.

eg
100 mil earning or dividend distributed to 100 mil shares, every share get $1

100 mil dividend distributed to 200 mil shares (be it split or bonus, it doesn't matter) every share get $0.50.

So that's why as mentioned earlier, bonus or split doesn't create any value.
It doesn't create nor reduce dividend shareholders potentially receiving.

It is just the numbering issue and accounting matter.

This post has been edited by cherroy: Aug 17 2017, 12:36 PM

SGreit market is having a mini bull run, so there are not many "cheap" reit around.
But market up and down is cyclical, it won't up forever, considered that reit has its own limitation on its up size.
So there will be a time, valuation emerge again.

For Australia situation, the concern is its property market is seemed rather too hot (some even said bubbling) which is fueled by super low RBA interest rate.
That's why I a bit wary on SGreit that having significant exposure to Australia property, particularly FLT whereby its properties are all in Australia.
Having said that, until now, Australia property market is still seems quite good.

Ascott right issue is expected to be yield accretion as it uses its proceed to buy yield accretion properties, so short term drop due to right issue may be temporarily, as once it is able to deliver the result that diminish the dilution effect, price will go back up.

Yes, market may be irrational for short term, but over a longer term, it is always following the reit DPU to justify its market price.
Similar to CMT recently, price suddenly shoot up more than 10% from 1.95 level to 2.16, now it is correcting.
It won't shooting to the roof one without increment in DPU or due to interest rate environment plummeting.

Assessing Reit is much simpler than ordinary stock, it is always following its DPU to move over the longer term.

This post has been edited by cherroy: Sep 8 2017, 09:49 AM

Reit market is simple, you can have 0 gearing, but if it can't deliver decent DPU, then market may also not like it.

Not every property is yield accretion nowadays due to high price of properties across the world.

Make it simple, it is all about delivering DPU to shareholders.

If the acquisition is yield accretion, even the property has a lower occupancy rate, it may be still considered a good buy.

1) The acquisition is yield accretive means potential improve DPU.
Reit performance is all about DPU.

2) Based on the info provided, the acquisition added average WALE to the entire portfolio, means the newer property is with long term lease. So existing low occupancy rate is compensated by longer WALE.

With recent dovish stand of Fed, I do not think reit price will go down very much.

Either close one eye, buy at elevated level , or park somewhere else like bond fund as Ramjade said.

We may need to wait much longer and need more patient for bargain.

Going to meet this week, but market has little expectation on rate hike.

They keep on talking on the rate hike, rate normalising, balance sheet reduction (for months and years), but the pace of walk on the talk is like on snail pace.
Instead we have report saying inflation is below target which diminish the rate hike chance.

Inflation won't be high when many commodities price are way off their peak level coupled with high USD exchange rate.

Treasuries yield has been staying low at around 2.0x to 2.3% speaks all the story.

Divy stocks are not cheap across as well generally.

The situation now is really giving plenty of dilemma for many investors.

Risk reward ratio doesn't seems quite right.

10b a month?

One year only 120b, need take a decade to unwind 1.5 trillion.

Slower than snail pace, no wonder bond market has no reaction.

That is 1.5 trillion, still left 3 trillion.

Before its balance sheet winding up totally, we may see another economy slowdown or crisis happening, then need to do QE again...

As many suspected (even before QE ended), the trillions of balance sheet has no way to be unwind totally.

Old school of financial
1) Stock up, bond down, as people chase for risky asset vice versa.
2) Interest rate up, bond down, reit down.

But modern day of financial, thanks to the 4.5 trillion
Everything up up up....
Even DJ managed to have one of the longest bull run in the history, without any meaningful correction.

I only can find one reason : market is flushed with money.

Old school of financial academy book cannot "pakai" when you have unprecedented QE in the history.

Yup, me also have the same view, it needs some meaningful correction, which is long overdue.

Btw, CMT has drop back to 2.00 level. Seems like 2.1x level is always good to sell.

For long term investment, the extra 1% paid due to exchanging SGD at bank board rate may become trivia, if the investment becomes fruitful.

Last time, changed at 2.7x + 1% at board rate, seems like 'pain".
But now after receiving various round of dividends + capital appreciation of reit price + Sgd appreciation, the extra 1% paid became like trivia.