Two routes into data centers. Neither tells me what I'd own.
I've got about $150k I want to put toward this sector and two routes on my desk, and after three weeks of reading I still can't articulate the difference in what I'd actually own.
Route one is a listed data center REIT. Liquid, I can sell it on a Tuesday, and the reported yield is well under what my existing passive positions pay. Most of the return case is growth in rents and new development, which means I'm buying a management team's future decisions.
Route two is a non-traded fund that buys stabilized facilities and takes minority positions in development ventures. Higher stated distribution, quarterly redemption with a cap and a gate, two layers of fees I've found so far and I suspect a third. Five to seven year expected hold, though nothing about that is binding on me or them.
What I keep circling is the same question in both cases. The whole sector story is that power delivery is the constraint, so the value sits with facilities that already have secured power. In route one I can read which markets they're in and roughly how much capacity is energized versus under contract. In route two the schedule I got is a list of asset names and MW figures with no indication of which MW are live and which are waiting on a utility.
My plan was to split it, and now I think splitting is just a way of not deciding. I don't need the money for a long time. I do need to be able to explain to myself in one sentence what I bought.