Cromwell European REIT - Got all the rights unit I applied for!

So I managed to get all the excess rights unit I applied for on Cromwell European REIT! As a shareholder having a measly position of only 1000 units from the IPO, I was entitled to 380 rights unit. I applied for 1620 excess rights units and got them all.

This brings my total holdings to a grand total of 3000 units - still small but significantly larger position. I estimate this bringing up indicative dividends up by about... 2.3x - 2.5x while they are distributing 100% of distributable income up till end of FY19 (as per their policy shared in prospectus back then).

* Calculated based on 1 EUR = 1.57 SGD

This came as a pleasant surprise for me as I do not expect to get all 2000 units. My last rights issue purchase was for Cache Logistic Trust, and even that was oversubscribed by about ~100%. It seems that this particular rights issuance was only ~5% oversubscribed.

Despite the increasing interest rate environment, DPU-dilutive effect of the purchase and the need to focus on paying off my borrowings or building up my emergency funds, I felt this was too necessary of an opportunity to pass up. It is icing to the cake that I get to pay $2 instead of $30 in commission to re-build my income portfolio. Heck, if I was in a better financial position, I would apply for a few thousand more excess rights units.

With that, although the this quarter has yet to come to an end, I update my portfolio for 4Q2018.

	Income Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
1	Cromwell European REIT	3000	0.667*	2001	13.80%
	Growth Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
2	Alliance Mineral Assets (AMAL)	50000	0.25	12500	86.20%
	Cash and other Assets
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
3	Warchest	1	0	0	0.00%
	Total SGD			14501	100.00%

* Calculated based on 1 EUR = 1.57 SGD

 Wishing everyone a Merry X-mas (or otherwise Happy Holidays) in advance!

Cromwell European REIT - 38-for-100 Rights Issue (Part 2)

This article is a follow-up to my previous short write-up about Cromwell European REIT here.

Cromwell European REIT's proposed rights issues has been approved by ways of the EGM on 15 November 2018 (link to announcement here). (I'm kind of late to the game for this write-up).

Summary
38-for-100 rights issue at 0.373 EUR per unit.
Acquisition is Yield-accreditive (expecting about +20% to distributable income), but not DPU-accreditive (expecting about -12% DPU).

Here is the indicative time-table for the rights issue:

Event	Date/Time
Last day of “cum-rights” trading for the Rights Issue	20 November 2018
First day of “ex-rights” trading for the Rights Issue	21 November 2018
Rights Issue Books Closure Date	23 November 2018 at 5.00 p.m.
Despatch of the Offer Information Statement (together with the Entitlement Letter) to Eligible Unitholders	28 November 2018
Commencement of trading of Rights Entitlements	28 November 2018 from 9.00 a.m.
Closing date
Last date and time of trading of Right Entitlements	6 December 2018 at 5.00 p.m.
Last date and time for acceptance of the Rights Entitlements and payment for Rights Units	12 December 2018 at 9.30 p.m.
Last date and time for application and payment for Excess Rights Units	12 December 2018 at 9.30 p.m.
Last date and time for acceptance of and payment by the renounce	12 December 2018 at 9.30 p.m.
Expected date of the issuance of the Rights Units	20 December 2018
Expected date for crediting of Rights Units	21 December 2018
Expected date for commencement of trading of Rights Units on the SGX-ST	21 December 2018 from 9.00 a.m.
Expected date for refund of unsuccessful applications	21 December 2018

Other things to note

• As of writing, EUR-to-SGD ratio is approximately 1.56. This translates to SGD 0.582 per unit for the rights issue.
• Counter is trading XR and has last traded at EUR 0.445 thus far.
• Fun fact: For an investor whose portfolio only included units from subscription to the IPO (about EUR 0.555 and EUR-to-SGD of about 1.609 at that time), he or she has to subscribe 153 rights units for every 100 to breakeven in capital based on current price (not for quick punt from my observation).
• This has yet to factor in any commission charge or forex gain/loss.
• This will cost more if the investor has decided to purchase more rights so as to guarantee  his rights subscription.

The author is vested (albeit in a small position) and intends to increase his position by means of the rights issue. This article is provided for info only and does not constitute the author's recommendation, solicitation or otherwise decision-making for any investors - DYOR/DYODD if you intend to purchase.

Cromwell European REIT - Recent Price performance and 38-for-100 Rights Issue

Introduction
Cromwell European REIT (SGX: CNNU) is a SGX-listed REIT that holds a portfolio of largely Office Properties based in Europe. It had successfully IPO-ed on its second attempt to list towards end of after adjusting the portfolio and the offering. Its sponsor is Australia-listed Cromwell Property Group. It trades in EUR dollars (for people investing with CPF-OA, you can't buy with CPF unless it's priced in SGD). The trust issues distribution semi-annually and intends to issue 100% of distributable income till FY2019.

Distribution
Its maiden distribution for period of 30 November 2017 to 30 June 2018 (7 months instead of 6 months) was paid out at EUR 0.0253 (SGD 0.04031) per unit. If we convert this to a semi-annual payment, it translates to EUR 0.02168 (SGD 0.03455) per unit. Based on its last traded price of EUR 0.545 as at 2nd November 2018, this translates to an annualised distribution yield of ~7.92%.

Share Price Movement
Looking at YTD Chart, price has been on the decline since its peak of SGD 0.635 on 17 May 2018. This is in line with Straits Time Index as well, which has been on a decline since its peak of 3615.28 on 02 May 2018.

Source: SGInvestor.io

Source: Yahoo! Finance

Interestingly, there has been some increased short selling going on (link to price movement on SGInvestor.io here) - looks like some traders are taking advantage of pessimism from the rights issue. The rights issue will cause weakness on its price for a while on top of interest rate hike, probably continuing to present headwind to the share price as with a lot of REITs out there.

The past few trading sessions have started to turn positive so after once it hits support and if the positive momentum of the market is sustained, that could mean the stock will find support not too far off that may allow slight rebound in price.

Rights Issue
On 30th October 2018, the trust had announced acquisition of 3 portfolios totalling 23 properties and intend to fund the acquisition partially via raising approximately EUR 224.1m by means of a 38-for-100 rights issue (remainder via debt financing). Altogether there will be 600,834,459 units at EUR 0.373 per unit up for offer in this rights issue. (link here). The acquisition and rights issue is subject to shareholders' approval during the EGM to be held on 15 November 2018 (Thursday) at PARKROYAL at Pickering.

Source: Cromwell European REIT

• Undertaking for Cromwell Singapore Holdings Pte Ltd and its related corporations to subscribe 35.31% for the rights issue. This is significant to me as they will maintain no drop in % of ownership of the share and hence can be interpreted as a vote of confidence.
• As of present, total share base is 1,581.14m. Post-rights issue, the total share base will be increased to 2,181.98m (enlarged by 38%).
• Theoretical ex-rights price (TERP) of EUR 0.498 assuming full and proportionate subscription by all shareholders means averaging down from current price by 9% (hardly the case though...).
• Based on theoretical forecast of distribution, total distributable income is expected to increase by ~22%.
• Taking into account the enlarged share base, this could translate to a theoretical reduction in DPU by 12%.
• CEREIT's current gearing is 36.8%. Since the acquisition will also be funded by debt financing, gearing will go up.
• A quick glance through the rights offering presentation slides reveals some properties have a short Weighted Asset Lease Expiry (WALE) (some are even only a month away from expiry!), so that may be a concern to some investors.

Disclaimer: The above (especially my own observations) should not be used as a decision to solicit buy/sell activity. Use all information at your own discretion and DYODD.