Fortress Real Estate Investments Limited recently made a significant announcement regarding its dividend election for the six months ended 31 December 2023. This development is crucial for investors, especially those holding Fortress B shares, as it offers them options for receiving dividends.
Understanding the Dividend Election
The dividend election allows eligible Fortress B shareholders to choose between receiving a cash dividend or opting for new fully paid-up Fortress B shares (capitalization shares). This decision hinges on various factors, including the shareholder’s investment strategy and tax considerations.
Calculation of Capitalization Shares
The calculation of capitalization shares is based on a reference price of 1 410.99122 cents per share, representing a 5% discount to the volume weighted average price (VWAP) of Fortress B shares. This ensures fairness in the allocation of capitalization shares to shareholders.
Let’s delve into an example to understand the calculation better:
| Number of Fortress B Shares Held | Cash Dividend (cents) | Reference Price (cents) | Capitalization Shares Entitlement |
|---|---|---|---|
| 100 | 81.44308 | 1 410.99122 | 5.77205 |
Rounding Principle and Cash Payment
It’s important to note the rounding principle applied in allocating capitalization shares. Any fraction of a new Fortress B share will be rounded down to the nearest whole number. Shareholders receiving fractions will receive a cash payment determined by the VWAP of Fortress B shares on the JSE.
Potential Impact on Shareholders
The dividend election has a potential impact on Fortress B shareholders. If all eligible shareholders opt for capitalization shares, a maximum of 67 531 816 new Fortress B shares would be issued. Conversely, if no shareholders choose capitalization shares, the total cash dividend value would be R952 867 997.41.
Conclusion
The finalization of the dividend election by Fortress Real Estate Investments Limited offers shareholders an opportunity to make informed investment choices. Whether opting for cash dividends or capitalization shares, understanding the calculation methods, rounding principles, and tax implications is essential. This decision-making process aligns with prudent financial management and long-term investment goals. Investors are encouraged to review the provided information carefully and seek professional advice when necessary to maximize their returns and optimize their investment portfolios.
