Digital infrastructure is central to the modern economy, and at the forefront of the fourth industrial revolution. However, despite the long-term tailwinds, high interest rates and inflation in recent months, have depressed sentiment in the sector.
Such has been the re-rating that, in a rare move, the usually very low-turnover VT Gravis Digital Infrastructure Income Fund, has made the most of the discounts available to add three new holdings to its portfolio.
Matthew Norris, investment adviser to the Fund, commented: “The Fund has initiated three new positions in the past few weeks, as new opportunities within the digital infrastructure sector appear.
“The first new position is in Digital Core REIT, a leading pure-play data centre Singapore-listed REIT, sponsored by Digital Realty, the largest global wholesale data centre owner and operator. What is particularly appealing about this REIT is that obtaining planning permission and power in Singapore is challenging, creating a substantial economic moat for existing data centres. It was trading at an attractive discount coupled with a strong and growing dividend yield.
“The next position is Rexford Industrial REIT, which owns, operates, and acquires industrial properties in the Southern California infill market – the fourth largest industrial market in the world, with the highest demand and lowest supply in the US. Logistics are a key part of the digitalisation mega trend and Rexford offers an attractive route to increase the Fund's exposure to this opportunity.
“The final position is Terreno Realty, a San-Francisco based REIT that acquires, owns, and operates industrial real estate in six major U.S coastal markets, which have historically been some of the strongest warehouse markets in the US. Terreno owns 259 buildings, 45 improved land parcels, has 7 properties under development and a landbank of c62.7 acres*. It has an attractive combination of c3% dividend yield and c7% dividend per share growth**. In fact, it has had uninterrupted dividend per share growth since 2013**.”
*Source: US Securities and Exchange Commission, Annual Report on Form 10-K for the Year Ended December 31, 2023
**Terreno.com, 28th March 2024
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