Results of Rights Units Applications for Ascott Reits are as follows:
| No. of Rights Units | % of Rights Issue | |
|---|---|---|
| Valid Acceptances | 246,557,766 | 97.2 |
| Excess Applications | 168,453,301 | 66.4 |
| Total | 415,011,067 | 163.6 |
From the results, it seems many investors subscribe to the rights allocation they were entitled to. In fact, only 2.8% were available for the excess applications. This came as a surprise as Reits are generally getting weaker and weaker each day from the news of Fed tapering. Perhaps, the huge discount plays a big factor in subscribing, at least that’s for my case.
I don’t hope much of getting excess applications. But at least I will be entitled to my rights, just like the 97.2% of people who subscribed to it.
Sometimes, we have to look beyond just the surface. Although risk free rate will go up with the FED tapering, the impact to the REITS depends very much on the bargaining power of the REITS to pass on the increase in interest expense to the tenants.
One interesting observation that I have noticed is that REITS prices tend to go up in an inflationary environment. This is largely due to the ability of the REITS to weather inflation through increases in rents.
Short term wise, I believe many analysts are right to say that REITS prices will come down with the tapering. Long term, it may be otherwise.