Awesome! PCRT just announced St James will be offering a buy out of existing shareholders via issuance of shares issued by the new Retail Group with a diverse property portfolio. The Vendor will offer S$0.70 per share. This is a whopping 27% premium over the current market place of S$0.55 per share. Net assets per share is S$0.77 per share. I am currently holding on to 55 lots of PCRT (after selling off 20 lots) and have just received S$1200++ in terms of cash dividends. No prize for guessing PCRT as my star performer for 2014.
Why then does the share price of PCRT still languish behind? Today, it touched S$0.60 briefly before dropping off and ended at S$0.55. Reason is simple: The market is pricing risk premiums extremely high and expecting a substantial discount from assets under construction as well the risk of not being able to secure quality tenants in view of overwhelming retail supply. There were even reports in mainland China of retail malls which offer free rental to their anchor tenants.
Anyway, chances are even if the new entity commenced trading, its share prices will eventually drop off to compensate for the market risk premiums. I would actually recommend current holders to sell off as soon as the new entity commenced trading. Just how much exactly? For those interested, jot down your request through your comments and I will oblige.
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