A couple of bloggers said great things about this upcoming IPO. I agree and think its a reasonable yield, with good growth prospects from freehold properties in a hot sector. I'll be subscribing.
But since I'm a pessimist by nature, lets talk about the downside.
Taxation
The biggest long term issue. Avoiding the 30% witholding tax goes against the spirit of the law. Lets face it, the US does not need Singaporean (or anyone else's) money to build buildings, and there's no benefit allowing foreigners to own local property. They may as well tax us. There's an ever-present risk that unit holders wake up one day to find 30% of their dividends taxed.
For those who miss the IPO, maybe you'll get a chance when that happens (or when the market prices it in).
This same risk applies to any SGX-listed US REIT, so I personally wouldn't hold more than one of them.
Inflation
US inflation is hot, over 5% pa for the past 6 months. Inflation is expected to continue rising due to increased residential rent.
Digital Core's rental escalations are only 1-3%, with a WALE of 6 years. If we get inflation spikes, we are stuck with today's rental for 6 years.
Management Incentives
The manager's fees and bonuses are based on total property value and net income:
This can incentivise management to do dilutive acquisitions: management fees increase when total income increases, even if per unit income falls.
The fact that Digital Realty will still hold 39% (or 33%) of the REIT helps to lessen the risk of them diluting its value.
Still, I'd prefer to see incentives based on "per unit" measurements.
Summary
Taxation is the biggest issue, and I think it'll will always be hanging over the head of this REIT. The others are normal REIT risks, see how they fit into your portfolio.
Position size accordingly.
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