Monday, 2 November 2015

Full Divestment of First REIT

The sponsor of First REIT and Lippo Mall Trust is reportedly considering shifting the two REITs to the Indonesia exchange as the Indonesian government will be removing the 'double taxation' law. Besides, most of the real estate assets owned by these two REITs are based in Indonesia, so I guess it makes sense for the parent group to shift the listing back to Indonesia. Furthermore, Lippo Group could be aiming to kickstart the REIT market in Indonesia as a shining example to other major Indonesian corporations.

I am not familiar with the actual process and mechanics of delisting from one exchange and re-listing on another. Lippo Group would probably buy out the stakes of the minority unit-holders at a premium. I managed to fully divest First REIT at $1.315 once the news broke last week. Its NAV is around $1. Will Lippo offer 30% premium over NAV? I doubt so......and I do not intend to stick around to find out. Anyway, even if the delisting does not happen soon, I am pretty sure it will always stay as a viable option for Lippo and this uncertainty just makes me feel uneasy.

First REIT contributes 4.5% of my annual dividend income So, this situation is a minor headache. Cash from this divestment was used to accumulate more Mapletree Logistics Trust (MLT). Sadly, this will not completely replace the passive income that I used to enjoy from First REIT. MLT is not related to the healthcare industry. I might have to resort to adding more PLife REIT or Raffles Medical Group in the future.

Aiming to hit my dividend income target of $1.5k per month in 2016. Fingers crossed that the market will not throw too many of such curveballs at me :(


DK

3 comments:

  1. Hi DK

    Wah, you are divesting while I am just entering it in :)

    ReplyDelete
  2. I'm waiting for clearer picture.....vested with lippomall.

    ReplyDelete
  3. Hello DK,

    I was only thinking if i should enter ton FIRST REIT. I heard they are not going to delist :)

    ReplyDelete