Stopped analyzing and bought the listed version. No regrets.

I spent half a year reading fund decks for data center exposure and I finally admitted I couldn't evaluate any of them. Every deck had a power story I had no way to verify. Minimums were 50k to 100k and lockups were five to seven years with no way out.

So I did the small thing instead. Put 15k into two publicly listed data center REITs and split it roughly even. Bought over four months rather than in one go, mostly because I didn't trust my own timing.

What I get out of it: I can read audited filings, I can see the lease expiration schedule and the megawatt disclosures, and I can sell on a Tuesday if I need to. What I give up is obvious, there's no sponsor-level upside and I'm paying a public market price for it.

The part that nearly stopped me was the feeling that this was the lazy answer. It probably is the lazy answer. It's also the only version of this sector where I understood what I owned before I owned it. Nine months in, dividends are small, the price has moved around more than I expected for something people call real estate.

What I'd keep: buying in pieces. The first tranche looked wrong within three weeks and I'd have talked myself out of the rest if I'd committed everything up front.

2 replies

1marcus_hale41CG4A

The lockup point is the one people underrate. A private data center fund with a seven year term and a sponsor extension option means you're along for whatever happens, including a two year power delay you had no say in. You bought the ability to change your mind. That has a price and you paid it in foregone promote. Reasonable trade at 15k. I'd think about it differently at 150k, where the diligence effort starts to be worth the hours.

3tylerbrooks9PassivePRO5

This is the version I'd actually do. One question though, did you look at what fraction of those REITs' revenue is tied to a handful of tenants? That's the concentration I'd want to see before I called it boring.