First imminent suspension: Wells Fargo first water REITs suspended trading

2022-06-28 0 By

On February 8, 2022, the closing price of the fund in the secondary market was 7.263 yuan, with a higher cumulative increase compared with the issue price of 3.700 yuan.The main purpose of the fund is to obtain stable cash flow such as fees for infrastructure projects.As the transaction price increases significantly, the net cash flow distribution ratio will decrease significantly.To protect the interests of fund share holders, Wells Capital Water REIT will be suspended from trading on February 9, 2022 and will resume trading on February 10, 2022.Other Notes Net cash flow distribution rate at the time of the Fund’s initial offering forecast value = estimated annual distributable cash flow/Fund offering price.Annual net cash flow distribution rate corresponding to each investor = annual dividend amount/fund purchase cost.The rising transaction price in the secondary market will lead to the increase in buying cost, resulting in the reduction of the actual net cash flow distribution rate of investors.According to the first income distribution announcement of Fuguo Capital Water Closed-end Infrastructure Securities Investment Fund in 2021, this dividend plan of the fund is 2.714 yuan /10 fund shares.The calculation method of the net cash flow distribution rate is illustrated as follows: 1. Assuming that the investor buys 1000 shares of the fund at the time of initial issuance and the purchase price is 3.700 yuan/share, the investor’s net cash flow distribution rate in 2021 =2.714*100/ (3.700*1000) =7.335%.2. It is assumed that the investor buys 1000 shares of the fund through the secondary market before the registration date of the interest of the dividend, and the purchase price is 7.263 yuan/share. The investor’s net cash flow distribution rate in 2021 =2.714*100/ (7.263*1000) =3.737%.It should be specially noted that the amount of dividend in the above calculation instructions is assumed based on the dividend plan of 2021 and does not represent the amount of dividend in subsequent years. If the amount of dividend in subsequent years is reduced, the calculation result of the net cash flow distribution rate at that time will be affected.More than 80% of the fund’s assets are invested in sewage treatment infrastructure projects. As the operating environment does not change significantly, with the growth of the operating years, if the Fund does not raise new assets during the remaining period, the market value of the assets it has held will decrease year by year, resulting in the gradual decline or even zero of the net value of the fund.The possible reason for the decrease of the net value of the Fund is that the franchise assets of the projects held by the Fund will be amortized phase by phase in the expected useful life, this part of franchise assets will be added to the annual amount available for distribution of the Fund, and the income will be distributed at no less than 90% of the annual amount available for distribution of the Fund.Risk presentation The Fund Manager undertakes to manage and use the Fund assets in good faith, diligence and responsibility, but does not guarantee a certain profit of the Fund, nor the minimum return.Investors should carefully read the Fund contract and the latest prospectus of the Fund when investing in the Fund.Please investors pay attention to investment risks.