Wednesday, January 14, 2009

Reit manager proposes payouts in units


Source : Straits Times - 14 Jan 2009

IN WHAT appears set to be a first here, the manager of Saizen Real Estate Investment Trust (Saizen Reit) has proposed paying dividends in the form of Reit units - rather than cash.

Investors here may have reason to be worried as one of the key attractions of such Reits lies in their regular dividend-style cash payments.

The Japan Residential Assets Manager said the proposed terms and conditions of the scrip dividend scheme, as it is called, are subject to the approval of unit-holders.

This announcement follows a Dec 31 statement in which the Reit said it might significantly reduce or suspend payouts in cash, in the light of the current financial crisis.

Saizen Reit is likely to be the first Reit here to offer such a scheme.

The manager said in its statement that the scheme will provide ‘flexibility for Saizen Reit to pay out part or whole of a dividend by way of new scrip dividend units (in the event that a dividend is announced) and allows cash to be conserved for loan repayments’.

It also said ‘the adoption and implementation of the scrip dividend scheme will enlarge Saizen Reit’s capital base, improve the liquidity of units and strengthen its working capital position’.

In the Dec 31 statement, the Reit had proposed a rights issue in a bid to raise $44.75 million to pay off loans and fund its operations. However, it assured unit-holders that it had sufficient cash resources to fully repay the 5.28 billion yen (S$87.4 million) loans that are due this month and in April.

The Reit manager will be submitting an additional listing application to the Singapore Exchange to seek the listing of the new scrip dividend units issued under the proposed scheme.

The details of the scheme will be set out in a circular to be sent to unit-holders at a later date. Saizen Reit will also convene an extraordinary general meeting in order to seek the approval of unit-holders for the proposed scheme.

Saizen Reit units closed 0.5 cent lower at 10.5 cents yesterday.


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