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.

“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.

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