It was never a good news on 28th Dec 2020 morning from First Reit. Its announced a proposed rights issue to raise gross proceeds of around S$158.2M to meet debt obligation which is due on 1st Mar 2021. The renounceable rights issue is of 98 rights units for every 100 existing units at an issue price of S$0.20/unit. Normally, rights issue is pretty much a norm for Reits as very often it will tap of unitholders to raise cash to grow its assets. However, given the saga of First Reit for the past 2 years, a very deep discount and dilutive rights issue just made me decide to divest all of it.
Invested with CPFIS since 2009, holding for more than a decade, collecting annual dividend until the dividend return is more than the initial capital being put in and to divest in such a manner is just speechless. The first thing I did on 28th Dec 2020 when market opened was just dumped at the opening price of S$0.39 and that's the highest price it can get before plunging to close at S$0.265. On 29th Dec 2020, it even hit an intra-day low price of S$0.22. At $0.39 divestment, that net me a capital loss of -12.39% since the holding price was S$0.4405. However, the dividend collected for the past 11 years gave me a return of +239.05%. Overall, the investment gave me a net return of +226.66% or annualized +11.36%. Still not a bad investment despite parting with a capital loss. Well, that definitely beat the CPF interest rate for a period of 11 years !
Was vested at S$0.5096 in 2009 and how did I get the holding price to S$0.4405 ? Firstly, did not participate in the rights issue in 2010 and since it is renounceable (yes, same as now), instead sold all the entitled rights. The proceed considered as dividend return. Next, have been opting for scrip distribution when it has one. The quantity of scrip collected increased the holding by 15.67%. This is how the holding price went to a low of S$0.4405. That's the power of collecting scrip dividend !
Any plan to use that capital for next investment ? Well, since 2015 I have been adopting the 孙子兵法 strategic investment method which either require a very low or nil capital, so that sum of money will just sit in the CPF and do nothing.
