TSX:DIR.UN - Post by User
Comment by
StormyDon Dec 03, 2019 8:01pm
115 Views
Post# 30419324
RE:RE:RE:New offering
RE:RE:RE:New offeringCorrect Sarge!
Almost all REITs offer a 3-4% discount to the brokerages involved in the bought deal offering when they are raising funds to cover acquisitions. APR.UN just offered new units on a 3.2% discount to the market close price of today. Sometimes if you were lucky - in the past - you could buy units of such issuing REITs lower than the new issue price on the open market the next day or two. Then the price usually recovers as you mentioned - especially by the day of the closing of the deal (usually a couple of weeks post issue).
FYI: I am not buying at these current lofty unit prices - just happily holding sweet units that I bought back in the day as they say!
One REIT which does not offer units at discount when making acquisitions is Nexus (NXR.UN). It offers property vendors units of the REIT in full or partial payment of property purchase. For the last couple of years, the vendors were offered units at $2.10 per unit (close to the NAV/unit) while the market price fluctuated a cent or two above/below $1.98 for many, many months. So, in effect, new units were issued at a premium - not a discount! Go figure!
The only REIT I own and which is trading significantly lower than when I bought in is HOT.UN. Should one consider it a buy with a 13% yield? Depends on your interpretation. I remain neutral - neither selling or buying! Warning to potential buyers of HOT.UN: there can be tax complications due to IRS WithHolding Tax if HOT.UN is held in a Canadian non registered account. Just saying!
Cheers!