$RHT HealthTrust(RF1U)

Attended the SIAS RHT dialogue session.

I would say there is nothing new coming from the CEO, as should be expected.

There were questions about valuation and SGD/INR FX. I would say just read the circular. FX is not something the manager can control. So what the manager has done is to fix the price at the FX rate a day before 30 Sep. Anything below this rate when the actual transaction is closed, unitholders will not be affected. However if there is any upside, unitholders will benefit from the extra few cents (hopefully). Again, these are found in the circular.

The CEO reiterated that it is the fiduciary duty of these trust manager to review any offers and present them to the unitholders for their approval/disapproval. One unitholder noted that no matter what, the related proxies will just vote in favor and the deal will go through.

One unitholder suggested that resolution 2 should be to just wind down the trust and distribute the remaining 5%, since it is likely that the shell will follow the footsteps of Saizen REIT with nothing done and having to wait for 1 year before delisting.

One unitholder asked why First REIT and Plife REIT are trading at a higher premium to book unlike what what was offered to RHT. I think CEO mentioned that that is because their revenue is in SGD, no FX risk, so RHT trades closer to book instead.

CEO mentioned that the risk is always there when the assets are overseas.
(This is something I think is valid and something we all should be mindful of the next time we want to invest in companies or trusts that hold assets based in a single country)

The CEO stated that Tier 1 hospitals (for the well to do class), the ones the trust owns, face oversupply and it is the lower Tier hospitals that are in demand (I believe this is what he is saying). So it is not correct to say healthcare is in demand in India without considering the different income demographics.

The CEO pointed out that additional regulations have caused revenue pressure and we cannot expect the kind of growth that was experienced years back.

One unitholder harped on the 3% annual rental escalation that Fortis operator is paying. The CEO mentioned that this rate is lower than the annual inflation of 4-5% and is not the main growth driver. The driver was actually the performance fees collected from the operator, which had been decreasing.

Resolutions 1 and 2 are exclusive of each other.

Resolution 1 will be passed if votes for exceeds 50% (imo this will be easily passed, even if FHL and RHT minions abstain from voting). See circular page 4: Summary of approvals sought.

No comments from CFO on why he will sell his shares at $0.90+ if he thought the same was a good deal. CEO said this was his personal decision, so he has no comment.

The rest were more of frustration and confusion on the long stop date and FX.

I may have missed out something, so please do add on for those who attended.

Conclusion: I am of 2 minds on whether to vote for or against now.

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While I agree with all the points that a NO vote is the best for shareholder interest, I also feel we should not fall in love with a stock and fight macro-trends. Still lotsa great counters out there to redeploy $$$.

As of now, I am still on the fence and will abstain from voting.


Reply to @nareshg : Because I am fine with Yes too

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We've started to tally the number of unit holders who are voting against Resolution 1 at Hardware Zone Forum, stocks & shares under the RHT health trust post. As at this moment, we have collected 1,044,000 shares from NO voters. It will be great if the brothers & sisters here can also contribute their shares to the tally count so we know where we stand in our battle against injustice & help motivate those who are sitting on the fence to join our cause. Don't you guys want them to come back with a higher offer price?


Reply to @Chius : I have been blowing hard at this candle to prevent the flame from petering out. Your participation has rekindled our hopes...

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How come the Japanese never come to Singapore to stop this deal lol . The Singh got shares in rht .


Abit disappointed that no shareholders wack them for the rubbish take over announcement on sgx whereby even many analysts think the fair take over should be above 1bucks ?
And to sell at 93 cents is personal decision - really bs to the max .
( the confusion of computation is super good )

And I am disappointed in myself for not turning up . Most probably I will walk out of the room without both of my shoes .


Reply to @thosai : mai ai neh kuan lah....save some dignity for yourself

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Firslty, thanks for sharing what you've learnt at the dialogue session. It's useflu for those of us who couldn't make it. I can't help but sense your despair after the session. Let me share with you my perspectives on some of the issues raised:
1) FX is beyond the manager's control. It's the fiduciary duty of the manager to filter off unreasonable offers to protect the interests of unit holders. I participated in 3 takeover offers which owned foreign assets, GLP, CM Pacific & Croesus Retail Trust. In all 3 instances, GLP, China Merchant & Blackrock made fixed price offers in S$, without the demand for unit holders to help them absorb the fallouts from the depreciating foreign currency. Why did the manager accept this condition which clearly put unit holders at a severe disadvantage?
2) I support the suggestion that Resolution 2 should be to just wind down the trust & distribute the remaining 5% so as not to further deplete the amount due expenses to stage the wayang show for another year.
3) I like to highlight that both Plife Reit & First Reit assets are mostly short leashold while RHT has 2/3 of Freehold properties. Which Trust ought to command a higher premium if not the same premium? FX rates fluctuate up & down on a daily basis. It might not always be in the unfavorable direction.
4) Management sang an optimistic tune earlier on, now that they're trying to push through this deal, they've changed to a pessimistic outlook tune. It might be true that there're more Tier 1 hospitals than government hospitals relatively speaking, but using the term OVERSUPPLY might be too strong a word. The common refrain I get when reading reports on the Indian healthcare industry is that there is an acute shortage of healthcare facilities. When I visited Underwater World Sentosa recently, the place was packed full of Indian tourists. There were parents with children & grandparents in tow. I witness this phenomena overseas as well in Bangkok, Shanghai & Europe. I have my doubts that healthcare facilities are being developed at such breakneck speed in India as to exceed the rapid rate of increase of crazy rich Indians. If I recall correctly, the last GDP figure for India was around 8%.
5) I believe one of the key reason for the drop off in performance of Fortis & hence RHT has to do with the legal woes ex Fortis management got itself into. Now that the mischievous Singh brothers are gone & IHH has taken over , tomorrow can only be better...
6)Do not underestimate the potency of this 3% p.a. escalation of the Base service fee. This is also revised upwards if any capex or expansion is completed. If they run the business well, this amount would increase in tandem & compound over time. Why do you think Fortis would even attempt to buy over the assets when their finances were in dire straits if this amount was not worth mentioning & if the hospital assets were not lucrative?
7) I'm holding RHT at an average cost of 75c. Assuming I get 76.6C(if it don't get diluted further by fx)+4c remaining=80.6c, which is a 7.5% return. Assuming things don't improve from here( not my base case scenario), annualized div yield is 5.7%. The takeover premium is just slightly over 1 year's worth of dividend. I sit & collect dividend for 2 years i outperform this deal easily, I will vote NO.
8) NAV is 79c. Assuming takeover price is 80.6c, premium to book is 2%. A 2% premium for freehold profitable healthcare assets is pretty bad deal for unit holders....
9) To add salt to the wound, the CFO sold all his RHT shares at 90c after the deal was announced. And the people we pay fat salaries to look after our interests tell us it's a good deal. Come on, give me a break...
It's a big fat NO from me...


Reply to @minx99 : Looks like after the event, more people are selling today...

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Hope everyone just Jin Tao vote No..

They low ball rht holders .
That why I say this board is useless - must get rid of them siah .


Oh man! I am just speechless on this Stock right now. Regretted buying and averaging down to 0.816, only collected at total of $0.04 dividend so still at a loss right now for this current share, guess have to wait for the outcome. Very painful share to hold on too.... sigh.....


Camping here!


Once IHH acquires Fortis they can bid a higher price to RHT unitholders to acquire RHT. IHH was willing to pay 22.5x EV/EBITDA to acquire Fortis. Is the cash flow and assets of RHT in any way inferior to Fortis? So why are we selling to Fortis at half the multiple IHH is willing to pay?
Doesn’t make sense to vote yes as the current share price is close to the exit offer and you still have to expose yourself to FX risks and delays in completion and wait at least one more year to get the residual 5% trapped in the company. Wouldn’t it make more sense to sell in the market now if you wanted to vote for Resolution 1? Those buying or holding at current share price should be hoping that: (1) IHH comes up with a higher bid once they realise that the current offer is inadequate; and/or (2) the business improves after IHH takeover from a previously fraudulent management at Fortis.


Reply to @sanfordchee : "One share, one vote" is a dangerous thing

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