The Soilbuild REIT IPO debuts at $0.78 per share on 16 August 2013. It is 5.4 times oversubscribed and raised a total of S$929 mil. I was initially very excited as I was alloted 3 lots for the IPO. Unfortunately, it tanked immediately on the first day of its debut and shed 6% by closing. It became a race to the door for many investors. This was a sharp contrast to the recent SPH REIT IPO where price went up almost 10% on the first day of trading.
Over the next few days, I accumulated over another 14 lots which help brings down the investment to an average price of $S0.735. I thought I got a good bargain with the discount to net asset placed out and a higher annual dividend yield at 8% but fate does make sports of man.....the market fear the tapering off of easy money by the Feds and at one point, Soilbuild REIT dropped to just a mere 70 cents per share. It remained in the doldrum for many weeks despite the efforts by the stabilizing manager.
Lessons learnt:
- Ensure presence of strong sponsor for future REIT IPO. SPH backed REIT is a good example. For soilbuild REIT, its sponsor disappear after getting it listed.
- Stay away from such IPO that is without cornerstone investors who have strong holding power.
- It is a myth to think that Industrial REITs are super defensive in nature. This is not true. Healthcare REITs and Retail REITs are actually more defensive in nature.
Another interesting point about Soilbuild is that its founder Lim Chap Huat actually make many millions listing then delisting and then repackaged his assets for listing. Mr Lim has subsequently went into the market mopping up millions of shares at around S$0.73 per unit. I guess he is the ultimate winner.
Anyway, I took advantage of the market rally yesterday and say "Bye Bye" to my entire stakes in Soilbuild REIT. Will most probably redeployed the capital to other more defensive REITS. I wish Mr Lim and his Soilbuild empire all the very best.
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