I think this an important point. Dilution of REIT equity is here to stay at the expense of minority shareholders. Raising equity at considerble discount to NAV will be value destruction.
The point to think is , whether this act makes REIT as non investible category, or we can still invest in REIT at a price where this risk is captured.
In my memory, I can remember many companies that do capital allocation errors, but the quality, longivity and growth in business compensates against the capital misallocation, when bought at reasonable price. For example ITC diversified into Paper & Hotels, businesses that have sub par economics compared to core business, and it will continue to do so in the future. Still, I think at a particular price ITC is a buy.
Can we think in similar manner about embassy, or we should completely avoid it, is a call that investor has to take.
Disclosure – Invested
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