K-REIT – Lim and Tan

• The Dec 3rd follow-up piece on S-Reits by the local columnist (Pros & Cons Of Rights Issues In Reits) could well dissuade some unitholders from subscribing for their entitlement to K-Reit’s 17-for-20 for rights at 85 cents each. (The Offer, which is being underwritten, closes at 5 / 9 pm today Dec 5th.)

• While the yield based on proforma DPU of 6.72 cents is tempting, we would go along and give the 17-for-20 rights a miss. Other reasons:

a. enough “damage” caused by one too many asset purchases with top-ups, the latest and for which the rights was called, being Ocean Financial Centre;

b. aggravated by uncertainties caused by the euro crisis so soon after the ’08 financial crisis with global banks again having to cut costs. This will likely affect demand for office space.