what price the cap raise?, page-5

Just some thoughts re a cap raising:

Early on some REIT SPs held up very nicely with cap raisings and for the likes of GPT and CHC if you held shares prior to the SPP and fully participated you were well ahead of the game as the SP did not fall near to the pro-forma break even ratio.

Lately, however, REIT cap raisings have not favoured existing holders compared to those with cash on the sidelines anticipating a cap raising and waiting to buy shares ex-entitlement. I am thinking specifically of FKP which recently announced a 2.3:1 cap raising.

With such a dilutive cap raising anticipated for GMG (say 1:1), it may be the case that retail GMG shareholders will need to sell down holdings to raise the cash to participate, and without the prospect of corporate takeover plays as with GPT, the SP could fall below the pro-forma break-even ratio, thus favouring investors with cash on the side lines who invest post-entitlement date.

For example, FKP was trading at 75.5c immediately pre-entitlement. With the cap-raising the pro-forma break even SP is 51.5c. Investors can now pick up shares on market at 46c.

With GMG, who knows? But worth considering your options as to whether you want to be a participating GMG investor or waiting to buy in at MAYBE a lower SP post-entitlement date... but then again there may be no cap - raising...

Cheers
John