The preferential offering by Capitaland Integrated Commercial Trust (CICT) to raise proceeds of around $757 million to fund the acquisition of 50% stake in Ion Orchard is ongoing and will close on 24 Sep 2024 9.30pm by ATM or earlier at 5.30pm by other means.
CICT is offering around 377 million shares to existing shareholders at a ratio of 56 preferential offer shares for every 1,000 existing shares at a price of $2.007.
The sponsor of the Reit, Capitaland Investment has irrevocably undertaken to subscribe their entitled preferential shares in full.
I find no compelling reason to not increase my investment in CICT which established itself as a pioneer in the retail Reit space before merging with Capitaland Commercial Trust in 2020, offering retail investors like us the unique opportunity to owning slices of Singapore's most iconic shopping malls including the likes of Raffles City, Westgate, Funan and top quality grade A commercial skyscrapers in the CBD such as CapitaGreen, Asia Square Tower 2, Capita Sky, and some other high quality commercial properties overseas such as Main Airport Centre in Frankfurt, Germany and 100 Arthur Street in Sydney, Australia. These diverse property types generate stable income streams over the years, making CICT a cornerstone in my income portfolio.
The acquisition of Ion Orchard further solidifes CICT's position as a leading Reit in Singapore. This prime shopping mall portfolio is a highly sought after destination for both locals and tourists contributing significantly to the Reit's income stream and asset under management.
As I own 18,506 shares of CICT, I am entitled to 1,036 preferential offer shares at $2.007.
As this is a slightly yield accretive fund raising project and at a yield of more than 5%, I intend to subscribe to 2,000 preferential offer shares, including excess and hope to get all if possible.
I decided to use the ATM to subscribe for the Preferential Offer Shares as using Paynow on CDP portal would also incur $2 transaction fee.
There it goes.
My investment in CICT is positioned for the long-term, at least the next decade, for passive income.
While the acquisition of Ion Orchard may primarily benefit CICT's sponsor, Capitaland Investment, the timing of the deal appears strategic. It coincides with a potential interest rate pivot and a stabilization of CICT's share price near its book value of $2.12.
Despite this positive backdrop, short-term market volatility remains a concern. CICT's share price could still be influenced by interest rate fluctuations and global economic news. However, I believe that the REIT's long-term prospects remain solid, supported by its diversified portfolio and proven track record.
If CICT's share price dips below $2 in the future, I am prepared to increase my holdings, as I view this as a potential buying opportunity. This confidence stems from my belief in the REIT's ability to navigate challenges and generate sustainable returns.
In the coming months, years and decade, I look forward to collecting more dividends from CICT perpetually effortlessly.
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