DigiCore REIT (“DCR”) has a strong rally during September 2023. There was an announcement by DCR Management team that DCR will be included in the FTSE EPRA Nareit Global Developed Index from September 15, 2023. This may have sparked the recent rally in its unit pricing from US$0.505 as at August 1, 2023 to US$0.580 as at September 8, 2023. In addition, the risk of major tenant Cyxtera entering into default and bankruptcy seems to be fading.
Will DCR Break the US$0.60 Barrier Soon?
I am optimistic that DCR will be able to hit above US$0.60 next year once the interest rate start coming down. Nevertheless, I have sold off part of my holdings (26,000 units being disposed) of DCR at US$0.575 to immediately realize an overall profit of +22.3% for these recently acquired units. I have acquired these units when DCR slumped to the US$0.43- US$0.48 range during the 1st half of FY2023. I do not like DCR as its financial performance has not been stable and as a matter of fact, giving unit-holders many heart-attacks since its IPO. 22.3% profit is equivalent to earning dividends over a 3 year period at 7% per annum.
Parting Thoughts
On the risk of default of its major tenant Cyxtera, things are looking well from the Chapter 11 proceedings with no lack of suitors. Brookfield and Digital Realty are reported to be interested in acquiring the assets of Cyxtera. I am still holding on to 38,000 units of DCR as I think that there should still be further capital upsides despite the not so ideal performance of DCR since its IPO listing.
From the price action, I think it will break $0.60 soon.
ReplyDeleteHi Henry, thanks for dropping by. Yup, keeping my fingers crossed- recently oil prices going up (with Saudi Arabia and Russia cutting supplies again) and US housing surprisingly went up (albeit lower sales).....inflation may make ugly come back which means further increase in interest rates.
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