No. of Recommendations: 0
They've undertaken discounted Rights Issues before same as some of the housebuilders. This often makes me wary, thoughts?
Not necessarily.
Obviously it's better to invest in a business that doesn't have a crisis, but unforeseen things do happen. That's certainly the classic risk of anything real estate related: periodic explosions due to leverage. As Mr Munger once noted, the reason he wasn't a real estate investor is because any string of return numbers followed by zero is still zero.
To me, it depends whether or not you determine that the "bad thing" that triggered the capital raise removed your investment thesis and belief in the future.
If you still trust the firm's prospects, just participate in the capital raise. If not, starting thinking about the best moment and method to exit.
Jim
