Private placement by Suntec raises questions

Couldn't the Reit have taken another route to avoid dilution for minorities?

Published Thu, Mar 20, 2014 · 10:00 PM
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MINORITY investors in Suntec Reit experienced that sinking feeling when they woke up on Wednesday to the news that the real estate investment trust had placed out 218 million new units overnight - not to them, but to private and institutional investors.

Suntec units, which were trading at a four-month high of $1.69, promptly fell 4.5 cents. It shed another half a cent yesterday, ending at $1.64 a unit.

Whenever private placements happen, minorities take the inevitable hit as they are now holding a smaller stake of the company. Distributions per unit (DPU), for example, fall from 9.3 cents to a forecasted 8.6 cents this year.

Some minorities would also not be comforted by the news that the purpose of the $350 million pla…

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