To me, buy either small or big volume should not matter much, if one is aiming for DY.

Sry just a question... Does the move to single tier dividend as proposed hinder you all to buy REIT shares? If not mistaken i think there are also withholding taxes involved in REIT. I'm just concerned with the tax issues if I get REIT shares.

FYI, my tax bracket is lower that of company tax rate...

Imteresting deal. Pretty much doubles its size. As a unitholder, I'm pretty keen to see the valuations and yields for these properties. Another 200m+ loans is a little worrying, but I hope they know what they're doing.

how it is going to finance the purchase? right issue?

UOA Real Estate Investment Trust (REIT) (5110) is considering buying two office blocks in Kuala Lumpur for RM500 million.  It received an offer from UOA Holdings, a substantial unitholder in UOA REIT, for the sale of Parcel B Menara UOA Bangsar and Wisma UOA Damansara II, priced at RM289 million and RM211 million respectively.  "The board of directors of the manager (UOA Asset Management Sdn Bhd) and OSK Trustees Bhd (trustee) will deliberate on the terms and conditions contained in the offer letters and a further announcement will be made upon completion of the deliberation," UOA REIT said in a statement to Bursa Malaysia Bhd.  Parcel B Menara UOA Bangsar, located in Jalan Bangsar Utama 1, comprises a tower block with 15 levels of office space, three levels of retail podium, six levels of elevated car park and four levels of basement parking. The newly completed commercial and retail property, which has a 99-year leasehold tenure, is 88.5 per cent occupied.  Wisma UOA Damansara II, located at Changkat Semantan, comprises a 16-storey office building and five levels of basement parking.  The two-year-old freehold property, used for commercial and retail purposes, is 87 per cent occupied.  The purchase of Parcel B, Menara UOA Bangsar, will involve a refundable deposit of 0.01 per cent, or RM28,900; a cash payment of RM156.03 million; and the issuance of 102.26 million new REIT units.  The purchase of Wisma UOA Damansara II will also involve a refundable deposit of 0.01 per cent, or RM21,100; a cash payment of RM113.92 million; and the issuance of 74.66 million new REIT units

I do not think Cash Payments referred to the cash kept in their banks. Most likely it is in the form of borrowing.

Remember they pay out 90% or more of the realised profits ( DPU )  to you,  in order to be tax exempted

Where  is the MAGIC cash to come from , in large amount ?

These press statements fool a lot of investors , esp those are new and eager to  just jump on board.

Too high a gearing ( borrowing )  caused many Singapore REITS in financial problems.

If one does not have the transparency to disclose their  gearing but saying it is using CASH to pay. I would think twice before investing. There is a purpose behind a purpose.

We reserve the right  to be  the doubtful, simply because our hard earned money is involved.

Many REITS are expansion paths.

So Gearing is one to be  monitored closely, bcos it tends to boost up or preserving earnings or DPU .

More right issues tend to dilute earnings per unit.

You remind me of the Singapore REIT- Saizen REIT,which default 7.3 billion yen.Interest rate is going up gradually,so the gearing ratio is getting more important in evaluating your choice of REIT, yield and DPU have to take a back seat.

As long as the right issue or private placement money is used to acquire properties that deliver at least as same as current yield, it won't dilute the DPU.

Actually I prefer them to raise money through private placement instead of gearing as long as those money being used to acquire properties that higher than current yield (or at least at par),
mainly because interest rate only has one way to go i.e. up only, while with low gearing, it poses lesser risk on the reit itself in term of defaulting or difficulty in refinancing the loan itself, as reit won't repaying the loan, but servicing the loan only, while most loan/borrowing are quite in short to midterm only, which several years down the road, refinancing always needed.

REITS in Malaysia cannot  run away from the problems faced by REITS internationally.

Of course, We are on better footing, but cannot just ignore the problems happened  elsewhere totally.

I taught they are going to issue new shares at RM1.30, or no?

As far, from several private placement had been issued, like Axreit, the private placement is based on market price average price at time being.

UOA Real Estate Investment Trust (REIT) (5110) is considering buying two office blocks in Kuala Lumpur for RM500 million.

It received an offer from UOA Holdings, a substantial unitholder in UOA REIT, for the sale of Parcel B Menara UOA Bangsar and Wisma UOA Damansara II, priced at RM289 million and RM211 million respectively.

"The board of directors of the manager (UOA Asset Management Sdn Bhd) and OSK Trustees Bhd (trustee) will deliberate on the terms and conditions contained in the offer letters and a further announcement will be made upon completion of the deliberation," UOA REIT said in a statement to Bursa Malaysia Bhd.

Parcel B Menara UOA Bangsar, located in Jalan Bangsar Utama 1, comprises a tower block with 15 levels of office space, three levels of retail podium, six levels of elevated car park and four levels of basement parking.
The newly completed commercial and retail property, which has a 99-year leasehold tenure, is 88.5 per cent occupied.

Wisma UOA Damansara II, located at Changkat Semantan, comprises a 16-storey office building and five levels of basement parking.

The two-year-old freehold property, used for commercial and retail purposes, is 87 per cent occupied.

The purchase of Parcel B, Menara UOA Bangsar, will involve a refundable deposit of 0.01 per cent, or RM28,900; a cash payment of RM156.03 million; and the issuance of 102.26 million new REIT units.

The purchase of Wisma UOA Damansara II will also involve a refundable deposit of 0.01 per cent, or RM21,100; a cash payment of RM113.92 million; and the issuance of 74.66 million new REIT units.

I may buy Stareit, I just hope the new injection of properties will enhance its yield.

If fund through the RM1.30 private placement and with better yield ahead, then seem ok for me. As there is little details, how new rental income from the new building.

As in current situation, I wish to see any new acquistion is fund through private placement, as borrowing cost will become higher only in near future, while as reported office space supply will be more due to completion of several new building which could depress the rental.
At the moment, I wish to see on reit is they secure borrowing on long term basic, which lock down the interest rate. So don't need refinance too often.

Location wise is a very important factor on the valuation, so cannot compared directly one.

As different location fetch different rate of rental. Just like KLCC can fetch >Rm10 per sq feet rental, while those outskirt KL may be around RM5 only.
Bangsar is around midvalley. KL properties price is quite high throughout. 

The important factor to judge the valuation is the ability to fetch the rental. If the particular area and properties can fetch good rental, then 40% higher than others properties won't be a big issue at all.

I came across an article that stated midvalley mall, can fetch as high as Rm50 per sqft rental for ground floor, it just show how the properties situation around KL.

darkknight81,

Allow me to comment a bit. The information you posted is really insufficient. A good analysis would have taken into account the current rental yield of the buildings, comparisons with surrounding buildings and average rental tenure of the tenants, and not the number of parking bays.

You mentioned that the gearing ratio for UOAREIT would rise to around 40%, which is alarming. I will be wary of companies with gearing of over 30%. A higher gearing rate would reduce our dividends, which is a negative issue for REIT investors.

UOAreit is one of the lowest holding among my reit portfolio.

Me more prefer Axreit, Qcap, Stareit. 

The primary concern should be put on the successful of private placement and good yield aka can fetch high rental and high occupancy.

If there is high rental and occupancy rate with steady outlook on it, higher gearing will be so much concern. While if the properties cannot fetch good rental and occupancy, then even no borrowing also looks no good.

The concern priority, (my view)
1) Rental yield
2) Occupancy
3) Lease quality, tenure and prompt payment.
4) Properties appreciation prospect
5) Properties expenses
6) Borrowing situation, gearing, tenure, borrowing rate.