DigiCo Infrastructure REIT reports a robust first half FY26 with a 15% rise in underlying EBITDA and advances its SYD1 data centre expansion, maintaining positive full-year guidance despite currency headwinds.
- Underlying EBITDA up 15% to $57 million in 1H FY26
- SYD1 88MW expansion fully approved and on track for staged delivery through 2029
- Australian business grows 95% with 22MW contract wins
- Strong liquidity of $658 million and gearing at 35.8%
- FY26 guidance maintained at $125 million underlying EBITDA despite foreign exchange challenges
Strong Half-Year Performance
DigiCo Infrastructure REIT (ASX: DGT) has delivered a solid first half for FY26, reporting a 15% increase in underlying EBITDA to $57 million compared to the prior period. This growth is underpinned by a 95% expansion in its Australian business, driven by 22MW of new contract wins, reflecting robust demand for data centre capacity in the region.
The company’s diversified portfolio, spanning Australia and the United States, continues to benefit from escalating recurring revenue streams and a high-quality customer base, including hyperscale and enterprise clients. DigiCo’s strategic positioning in key locations with strong connectivity remains a competitive advantage amid accelerating digital infrastructure needs.
SYD1 Expansion: A Growth Catalyst
A focal point of DigiCo’s growth strategy is the SYD1 data centre expansion in Sydney. The fully approved 88MW project has secured all necessary planning and power arrangements, with the initial 20MW phase on track for commissioning by Q2 CY2026. The staged delivery of the full expansion is scheduled through 2029, targeting a 15% incremental yield on cost, which management expects will materially boost earnings in the second half of FY26 and beyond.
Capital allocation is being prioritised towards SYD1, with the company actively engaging potential Australian capital partners and considering asset recycling and partnering opportunities in the US to fund development. This disciplined approach aims to optimise returns while maintaining a sustainable gearing level, currently at 35.8%.
Financial Strength and Outlook
DigiCo’s balance sheet remains robust, with liquidity of $658 million comprising cash and undrawn debt facilities. The net asset value per security stands at $4.50, supported by independent valuations of $2.4 billion for Australian assets and $1.7 billion for US assets. Capital expenditure of $49 million in 1H FY26 was primarily directed towards growth projects, notably SYD1.
Despite foreign currency headwinds, the company maintains FY26 underlying EBITDA guidance at $125 million, at the top end of its previous range. Distributions are expected to be 12 cents per security, consistent with a payout policy of 90–100% of funds from operations.
Development and Sustainability Initiatives
Beyond SYD1, DigiCo is progressing other Australian growth projects, including the upsized ADL1 expansion to 15MW and the planned 20MW BNE3 development, both contingent on cornerstone customers and capital partnering. In the US, the Los Angeles (LAX1) development faces delays due to community concerns and environmental reporting requirements, with management prepared to recycle capital if approvals do not proceed timely.
On sustainability, DigiCo is aligning its strategy with the broader HMC Group, preparing its first climate-related financial disclosures under Australian standards for FY26. The company highlights initiatives in energy efficiency, renewable energy adoption, and water conservation, alongside a strong commitment to gender diversity at the board level.
Bottom Line?
DigiCo’s disciplined capital focus on SYD1 and robust financial footing position it well to capitalise on surging data centre demand, though execution risks remain in US developments.
Questions in the middle?
- How will DigiCo’s capital partnering negotiations in Australia and the US evolve to fund growth?
- What impact will foreign currency fluctuations have on DigiCo’s full-year financial performance?
- How might delays in LAX1 approvals affect the company’s US portfolio strategy and asset recycling plans?