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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Scott Mc who wrote (3442)	6/13/2002 10:30:20 PM
From: Peter W. Panchyshyn	Read Replies (1) \| Respond to of 11633

The bottom line is that 1. There are additional management fees paid, and ------ I asked that people do the math for themselves to see. Below I will give that math since it seems to difficult to be done by yourself. ---------- 2. A rights issue is dilutive and there is a cost to issuing them. ----- Now at first glance the issue may seem dilutive. But what do they do with the money raised? They buy more trusts. The money raised is not wasted it is used to grow the trust. Or pay down debt if any. Which then translates to stable or rising payouts ------------ These are both real costs that come out of your distributions. ------ Care to provide any evidence where a decrease in the payout has been a direct result of the issuance of rights. After the last rights given by SDT.UN the payout remained the same as the previous month. Later payouts did fall but it was a direct result of lower commodity prices suffered by all the energy trusts. So since the trust of trusts has a sizeable portion of oil/gas trusts there was a corresponding drop in payout. That however was not the case for EIT.UN which has maintained its payout at $0.07 throughout the entire time and it likewise did a rights offering as well. So as the evidence shows , which you yourself can check on, NOTHING CAME OUT FROM THE DISTRIBUTIONS.----------- If you feel that fund management covers their costs and/or the reduced risk offered by a larger # of holdings are justified thats fine. ------ Feelings have nothing to do with it. I look only to the facts. The evidence. One bit of evidence was in regards to the payouts as described above. For one trust of trust (EIT) they never fell as a result of the issuance. In the other case the falling in distribution was only months later and more as a result of lower commodity prices. Now to a simple math example. I will use the latest rights offering for SDT. The convergent price was $3.51. It did not take too long for the unit price to recover to where it was before and the unit price now sits at $4.59. One can look to its past 3 other rights/warrant offerings for somewhat similar results. Now as an additional peice of info some of the individual trusts have never done rights/warrant offerings. Now similar to the above can be shown to have occured for EIT in its past several offering of rights/warrants. Add to all this as well the trading of the rights and warrants that a unitholder can undertake as well. And which my documented posts show I have benefitted greatly from ------------- Or it may be worth owning just to be sent their quarterly reports, no problem. Just remember they are real costs above and beyond owning the underlying trusts. ------ Now as I said one has to look at what one ends up getting for those so-called "costs". An extra 1% to 2% additional fee that comes off the top beforehand to all unitholders pales in comparison to a 30+% rise in unit value for the individual unitholder that takes advantage of it. Or a triple digit gain from trading the rights on the open market as I have described in my past postings--------- ----- Now say I hold 100,000 units of SDT before the rights offering. Initially the price of the units will drop as the rights are given. But one now has 100,000 rights that will also trade on the market. Initially this will be equal. Leaving the individual unitholder no better off and no worse off. Until the rights begin to trade for the month or so they are available. Trading will be all over the place. Ranging from mere cents to a couple of dimes or more. Catching those swings one can benefit greatly as I have documented. When the rights end those wishing to will have already convert the rights and now have 125,000 units paying the next month the same dividend it paid the month before. And by that time the units will have risen back to where they were before or higher as in the last case. Because that is what they have done each and every time. Not to mention that on the time of exercise there is usually a premium to the exercise price giving the unitholder an immediate benefit---- Scott