OUE Hospitality Trust Issues Rights to Fund Acquisition of Crowne Plaza Changi Airport Extension

OUE Hospitality Trust Logo

On 7th March 2016, OUE Hospitalty Trust announce an underwritten and renounceable rights issue to raise proceeds of S$238.6 million.  The proceeds from the rights issue will be used to fund the acquisition of the Crowne Plaza Changi Airport Extension (CPEX).

In the press release, Mr Chong, CEO of the REIT manager mention that following the rights issue, OUE H-Trust’s gearing will be reduced from 42.0% to approximately 37.8%.

33 Rights Stapled Securities will be offered for every 100 existing stapled securities in OUE H-Trust.

The Rights Stapled Securities will be issued at S$0.54. This is a discount of approximately 29.4%, based on the closing price of S$0.765 on 7 March 2016.

Things to Note

I have never subscribe to rights before. Some personal thoughts or questions for me to find out.

  1. As issuance of rights usually dilute the share price, what will be the fair price after rights issue? This is similar to the recent ARA rights issue whereby the share price fell from estimate $1.17 to $1.05 after rights issue.
  2. How do I subscribe for the rights?
  3. How do I or should I subscribe for excess rights?

Book Review: How 30 Good Ideas Became Great Businesses

How 30 Good Ideas Became Great BusinessesDo you aspire to be an entrepreneur? Do you have an idea but didn’t know if it will work out? Recently, I have borrowed a few books about entrepreneurship from the National Library. I hope to learn what are the challenges and how others embark on the path of entrepreneurship.

This book is about how 30 good ideas became great businesses. Two excellent points I learnt from the book:

#1 A significant minority of the founders started the business as a part time activity while they carried on with their day jobs t find their living expenses, focusing full time on their own business when it had shown enough potential to make them take that leap.

#2 Eighteen hours are pretty common.

The case studies in the book can be broken down into a few categories: Food and Drink, Retail, Restaurants and Leisure, Internet, Manufacturing, Media, Technology and Services. Have you heard or used Bebo? I have. It used to be in the same era as MySpace.

Food and Drink

  1. Gu Chocolate Puds
  2. Innocent Drinks
  3. Cobra Beer
  4. The Black Farmer
  5. The Fabulous Bakin Boys
  6. S&A Foods

Retail

  1. Dreams
  2. Cotton Traders
  3. Glasses Direct
  4. One Small Step One Giant Leap
  5. Jojo Maman Bebe
  6. Bravissimo

Restaurants and Leisure

  1. Hotel Du Vin
  2. PizzaExpress
  3. The Cinnamon Club

Internet

  1. Bebo
  2. Moneysupermarket.com
  3. Friends Reunited

Manufacturing

  1. Dyson
  2. Vitabiotics

Media

  1. Codemasters
  2. Dorling Kindersley
  3. Extreme Group

Technology

  1. MeetingZone
  2. Sage
  3. Psion Teklogix

Services

  1. Hargreaves Lansdown
  2. Jigsaw Research
  3. Pimlico Plumbers
  4. The SG Group

A good read, however personally feel it lacks content as compared with How 25 Good Ideas Became Great Companies. I give the book a below average rating 2 out of 5 stars.

Rating_BelowAverage

My Sweet Retirement Current Portfolio Dividend Yield

Retirement

Recently, I did a rough calculation of the dividend yield on my stock portfolio. The formula is based on the total dividends I collected for FY15 divided by the total amount I invested. The current annual yield of my investment portfolio stands at 5.40%.

Being curious how much I will have when I reach 55 years old, I used the Dividend Calculator found on Dividend Ladder to do a projection. If I have a total invested amount of $200K (for illustration purposes only) and with my current annual dividend yield of 5.40% (current), how much will I have for retirement at 55 years old?

I punched in the figures as follows:

Principal amount: $200K

Annual addition: $24K

Years invested: 21 (I am currently 34. At 55 years, thus 21)

Annual Dividend Yield: 5.40%

Dividend Reinvested: Yes

Here are the results. At age 50, I will be a millionaire! By 55 years which is my targeted retirement age, I will have $1.5 million.

Having said that, is $1.5 million today or in the future enough for retirement? Nevertheless, I shall invest prudently and consistently to improve the annual yield of my portfolio. Looking forward to days where I shall never had to work a single day.

Dividend Calculator