By the time you are reading this, you would have left about a few hours to decide on whether to subscribe to the Digital Core REIT IPO, whose application closes at 12:00 PM today (2 Dec 2021).
Several financial bloggers had covered this IPO and their views ranged from good to not-so-good. Summarizing some of the selected good and not-so-good points (which includes mine), here it goes:
| Why Good? |
Why Not-So-Good? |
| Low gearing (27%) |
Subject to withholding taxation risk |
| All freehold properties |
Not-so-new buildings (built between 1972 and 2001, though 5 of the 10 properties had undergone at least one renovation) |
| 100% occupancy |
Rental escalation does not keep up with prevailing and projected U.S. inflation rate |
| Strong sponsor (of data centres) |
Top 3 customers provide 78.3% of base rental income (for June 2021) |
| Data centre a current in-thing |
|
The Bedokian’s Take
Both sides of the argument seemed reasonable and relevant. My answer on whether to apply for this IPO, as always, is “it depends”...
