DigiCo’s $67.9M Loss Highlights Risks of Rapid Expansion in Data Centre Sector
DigiCo Infrastructure REIT, newly listed on the ASX, posted a $67.9 million loss for its inaugural period ending June 2025, reflecting significant acquisition and IPO costs amid rapid expansion in data centre assets.
- Completed $2.75 billion IPO raising
- Acquired iseek for $413 million and Sydney SYD1 data centre for $2.04 billion
- Reported $113.9 million revenue with $67.9 million statutory loss
- Declared final distribution of 10.9 cents per stapled security
- Maintained 35.1% gearing with fully hedged debt facilities
A Bold Market Debut
DigiCo Infrastructure REIT, a newly formed stapled group focused on data centre ownership and development, marked its entry onto the Australian Securities Exchange in December 2024 with a substantial $2.75 billion initial public offering. The group’s first financial period, spanning from November 2024 to June 2025, reflects the early costs and investments associated with this rapid growth phase.
Financial Performance and Distribution
During this period, DigiCo Infrastructure REIT generated $113.9 million in revenue but reported a statutory loss after tax of $67.9 million. This loss is largely attributable to acquisition-related expenses, depreciation, and finance costs linked to its aggressive expansion strategy. Despite the loss, the group declared a final distribution of 10.9 cents per stapled security, signaling confidence in its underlying cash flows and operational prospects.
Strategic Acquisitions Drive Growth
Key to DigiCo’s growth was the acquisition of iseek, an Australian data centre and cloud services provider, for $413 million, partly paid in stapled securities. Shortly after, the group acquired the SYD1 data centre campus in Sydney for $2.04 billion, a transaction accounted for as an asset acquisition due to the concentration of assets. Additionally, the group expanded its US footprint with $1.3 billion in asset acquisitions across Kansas City, Dallas, Los Angeles, and Chicago, including both stabilised and greenfield development sites.
Capital Structure and Risk Management
DigiCo Infrastructure REIT maintains a gearing ratio of 35.1%, supported by fully hedged debt facilities with maturities extending to 2028-2030. The group’s debt is split between Australian and US dollar facilities, with interest rate swaps and caps mitigating exposure to variable rates. Management highlights risks including lease renewals, capital expenditure overruns, regulatory compliance, technology evolution, and foreign exchange volatility. The group’s diversified portfolio and long-term leases with high-quality tenants aim to underpin stable income streams.
Governance and Outlook
The board comprises experienced independent and non-executive directors, with operational management outsourced to subsidiaries of HMC Capital Limited. Notably, the SYD1 data centre received ‘Certified Strategic’ status from the Australian Government post-period, reinforcing DigiCo’s role in critical national digital infrastructure. As DigiCo Infrastructure REIT transitions from its foundational phase, market watchers will be keen to see how integration of acquisitions and operational execution translate into sustainable earnings growth.
Bottom Line?
DigiCo’s inaugural results underscore the costs of rapid expansion but set the stage for a pivotal role in Australia’s and the US’s digital infrastructure landscape.
Questions in the middle?
- How will DigiCo manage integration risks from its large-scale acquisitions?
- What impact will rising interest rates have despite current hedging strategies?
- How will the ‘Certified Strategic’ status of SYD1 influence future government and enterprise contracts?
