Monday, June 29, 2020

A Reit that I do not dare to sell again

AT&T Data Center at 402 Franklin Road, Brentwood, USA

On 20 May 2013, I bought Mapletree Industrial Trust (SGX: ME8U) at $1.555 as a novice investor.

Its share price plunged to the $1.20 - $1.30 region for me to incur a loss of more than 20% for the next few months.

Back then, Reits were not a popular financial instrument. All industrial Reits were traded at discounts to NAV.

On 24 Apr 2014, I eventually sold MIT at $1.435. At a loss of 5% after dividends. Buy HIGH Sell LOW.

The share price of MIT rose steadily in the next 6 years in tandem with rising net property income, DPU with quality acquisitions along the way. The share price breached $2 in Dec 2017 and scraped $3 in Dec 2019.

Then comes the market crash in Mar 2020 when its share price dived from $3.04 to $1.87 and then made a V shape recovery back to $2.98.

After observing the defensiveness and resiliency of MIT during a crisis, I decided to nibble MIT at $2.38 during the halfway recovery in Apr 2020 before its Q4 2020 results announcement. As expected, the impact of the health crisis to its net property income is minimal and its share price continued to rise. I actually sold it off for a small profit thinking that there would be retracement.

I realised it was a grave mistake trying to time the market. I should have always kept MIT long term.

The FOMO in me prompted another purchase of MIT at much higher price $2.73 after MIT was announced to replace SPH in the Straits Times Index. I knew its share price has a high chance to recover back to pre-Covid levels and it really did.

On 23 Jun 2020, MIT announced a $350m private placement to acquire the remaining 60% interest in 14 Data Centers from Mapletree Redwood Data Center Trust. Though dilutive, this deal is DPU accretive and will increase the % of resilient data center assets in its property portfolio. This acquisition  serves to sustain the share price of MIT above $2.80, which is the private placement price for institutional investors.

Even though the share price of MIT is $2.95 at the time of writing presenting decent capital gains, I do not dare to sell it again as I learnt my mistake of timing the market and believed strongly that MIT will do well in the long run in terms of DPU and share price.

It will take extreme bad news and immense fear before institutional investors and funds sell off MIT for its share price to correct and every dip will be a good opportunity to add based on dollar cost averaging.

Riding on the waves of digitalization, Industry 4.0 and advent of data analytics, MIT is a solid and steady Reit well positioned for the future and should be a long term investment. NOT FOR TRADING NOR SHORTING.

The above is just my personal sharing and opinion and is by no means any recommendation of investment advice. Thanks for reading!

Love & Peace,

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