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It was quite a dramatic week to observe the price of AA REIT. It dropped by nearly 9% as a result of the call option excercised by its sponsor to acquire its 10ish stakes in the reit from its ex-co-sponsor and subsequently placed these entire block to other insitutional investors at S$1.35 per unit. Prior to the news, AA REIT was trading at S$1.47-1.48 range. I did a bit of research on the news and came to the conclusion the impacf from such an exercise would not have a significant impact on the overall operation of AA REIT as these unit exchange is secondary transactions, meaning that the existing unitholders will not have any impact at all. However, the bigger question presumely is why the sole sponsor, AIMS Financial, place the block to other investors at the discout instead of increasing its stakes in AA REIT.
I have no clear answer to these two questions but if I look at the ownership of AA REIT which is solely owned by the sponsor (previously 50/50) and its current stakes in the AA REIT (difficult to find but assume at 10ish%, no change), the sponor should be keen to furthur develop abd grow the reit. Given the price level (1.02x P/B, 7.4% DPU yiled) and the capable managemen team, I decided to increase my position in the well-run reit at fair price.