Dear Stockcommunity,
I was hoping one of you kind folk could help me.
One of my holdings, Warehouse REIT (LON:WHR) has launched a 2 for 5 rights issue at a price of 103p per share.
The current share price (offer) is 103 which is the same as the rights price.
I expect the true price I can execute at is somewhere between 102 and 103
Should I be indifferent to taking up the rights versus buying the same number of shares in the open market?
For that question, let's assume there are no transaction costs.
In reality, I would incur commission and stamp duty, which may explain the difference between rights price and market price.
Separate question - to me it is pretty rare for a REIT to issue new shares at a premium to market price (still a discount to NAV). Is it naive to think this is a good sign or at least a signal of institutional confidence?
Many thanks in advance for your insights
For this question, I think you shouldn't exclude transaction costs as this is the differentiation between whether it is more cost efficient to buy in the market or via the open offer. Note, you would not incur stamp duty as this trust is quoted on AIM.
Having come to the market less than 2 years ago it seems a bit odd that they are raising so much money again so soon. But perhaps conditions really are as buoyant as they say.
Maybe this makes the question for you easier as to whether you actually want to make an additional investment in this trust... for if you are not sure, then it doesn't seem to matter all that much whether you invest in the offer or outside it.
