Saturday, 18 March 2023

DigiCore REIT- Disaster In The Making Or Potential Upsides?

I think I need to be very clear upfront to all folks here that my postings here is more for my own reference and documentation of my personal investment journey and thoughts. It is not a buy or sell recommendation or trying to influence folks to follow what I do. In any case, I am sure that all folks agree that everyone's own circumstances and investment philosophy is unique especially in the current climate filled with grave uncertainties. The only certainty is to diversify your investments and not to over-concentrate one's own investment portfolio such that a major disaster becomes a huge loss in capital that one can never recover from and then regret it for the rest of your life.  

1. DigiCore REIT- Disaster In The Making Or Potential Upsides?
Now back to the main topic on hand. Given that the dust over the plummeting share price of DigiCore REIT has more or less settled with many analysts and the senior management of DigiCore REIT coming out to comment on the root cause, I will just sum up the situation with the following flowchart:
So, it boils down to one's perception of whether DigiCore REIT will end up in scenario 1 or scenario 2 given the worsening economic conditions. 

2. Refinancing risk for DigiCore REIT given the recent banking crisis in US.
The major re-financing risk for DigiCore REIT is due in 2026 which is another 3 more years away.
Parting thoughts
Personally, I am keeping my investment exposure to DigiCore REIT to less than S$50K. As I mentioned in my previous post, I am not a major fan of DigiCore REIT given that there is already a major tenant default (Sungard) and another potential one coming within a short span of its IPO in December 2021. Really makes one wonder whether the sponsor Digital Realty is dumping low quality tenants into DigiCore REIT. However, at my various lower entry prices relative to IPO, I am contended to stay on course for now and will continue to monitor the latest development closely.

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