“The investment proposition for both REITs are actually quite different. I know we use the REITs for both companies. But when you think about the sponsor, they’ve got a material developed pipeline. The dividend yield for the sponsors is 3% whereas for Digital Core REIT, the yield is 4.75%,” Tith explains, adding that Digital Realty is an owner operator and not an asset manager.
Digital Realty Trust is one of the world’s largest data centre owners and operators. In the US, Digital Realty is an operator and developer of data centres with a DPU yield of around 3%. But Digital Realty is also sponsor to the Singapore Exchange’s latest IPO, Digital Core REIT. Isn’t it unusual for a REIT to sponsor another REIT?
That’s not quite how it appears. According to Daniel Tith, CFO of Digital Core REIT’s manager, Digital Realty is structured as a REIT for tax efficiency.
