Wednesday 6 April 2022

Lendlease Rights Issue Part 2- Preferential Tranche Now Open And New Subscription Method Available.

For those who have not subscribed for their Lendlease Global Commercial REIT ("LREIT") preferential rights issue, please take note that the closing date is on 12th April 2022 (Tuesday) 5pm. As I had mentioned in my last post, unit-holders who have no money or refuse to subscribe will be severely diluted by the super low ball price of S$0.72 per unit which is a 20% discount to the January 2022 peak of S$0.90 per unit. Personally, my thoughts are to at least subscribe at S$0.72 first and then sell them off at the higher last traded price of S$0.795 per unit (as at 5th April 2022) upon issuance if cashflow are tight. 

Application options for LREIT Preferential Rights Offerings (for those who held units directly in their own CDP account)
Some folks have emailed me or posted query with regard to the subscription methods. The usual traditional participating banks for ATM application are (i) DBS (including POSB), (ii) OCBC and (iii) UOB.

There is a new payment method via PayNow that had been implemented by SGX-CDP. 
Extract of LREIT Rights application via PayNow

I do not really like the PayNow method as it is not intuitive enough in terms of user-friendliness. Those using it please read carefully on the instruction manual sent out to unit-holders on how to populate the fields after scanning the QR code using your bank payment App for PayNow. The parts that I think may pose some challenges to users:

(i)  One needs to know exactly how to key in the reference field using a mix of security counter code along with the last 8 digit of your CDP account number. Some unit-holders might forgot to key in the Lendlease counter code or key in full CDP account number. The ATM application is clearer on these aspect with the detailed step by step screen;

(ii) You also need to key in the dollar amount of the total amount of rights plus excess in the dollar value field- I am sure there will be some lost souls here who will key the number of units here instead of the dollar amount or just key amount for rights but forgot the "excess" rights one wanted;

(iii) You need to ensure your PayNow daily limits are set at an amount exceeding the amount you need to credit for this exercise.

Parting thoughts:
I will probably still stick to the traditional ATM application for the step by step instruction appearing on the ATM screen to guide one through the application process for the rights plus excess application. I hope that CDP will work on enabling the rights issue to be done via the internet banking interface in future instead of just ATMs. Last but not least, the initial huge decline in price of LREIT upon the announcement of the right issue has somewhat stabilized. It is intriguing to see that there is now an arbitrage situation with significant upsides arising from the rights pricing and most recent ex-dividend market trading price of LREIT. 

(Note: Recently, there is an interesting case of rights issue being priced higher than market trading price. Yup, I am talking about the Mapletree Commercial REIT fund raising exercise to pay for the acquisition of Mapletree North Asia Commercial REIT).

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