DigiCo Infrastructure REIT has agreed to sell its LAX1 and LAX2 data centres at cost, aiming to recycle capital into its higher-returning SYD1 development. The sale, expected in the first half of FY27, will lift available liquidity to about $1 billion following the earlier Chicago sale.
- Conditional sale of LAX1 and LAX2 sites at acquisition price
- Capital recycling aligns with focus on SYD1 Sydney development
- Available liquidity to rise to ~$1.0 billion post-sale
- FY26 Underlying EBITDA guidance reaffirmed at $125 million
- Completion expected in first half of FY27, subject to conditions
Strategic Asset Sale to Fund Sydney Development
DigiCo Infrastructure REIT (ASX:DGT) has entered a conditional agreement to sell its LAX1 and LAX2 data centre sites in Los Angeles for a price broadly in line with the original acquisition cost. This move is a clear signal of the REIT’s intent to recycle capital from what it terms non-core assets into its higher-returning SYD1 development project in Sydney.
Following the completion of both the LAX and Chicago (CHI1) sales, DigiCo expects its available liquidity to increase to approximately AUD 1.0 billion on a pro-forma basis. This significant cash buffer is anticipated to underpin funding for the SYD1 development, which has been a major focus for the company’s growth strategy.
Transaction Timing and Conditions
The sale of the LAX sites remains conditional on customary regulatory and contractual conditions, with completion targeted for the first half of FY27. While the transaction price aligns with the acquisition cost, the sale is less about immediate profit and more about capital allocation efficiency within DigiCo’s portfolio.
This approach follows the earlier sale of the Chicago asset, which reduced net debt substantially and accelerated the Sydney expansion, as previously reported. The recycling of capital from North American assets to fund Australian development highlights DigiCo’s strategic prioritisation of higher-yielding projects within its global portfolio.
Financial Outlook Remains Steady
DigiCo has reaffirmed its FY26 Underlying EBITDA guidance of AUD 125 million, which includes the full-year contribution from the Chicago asset sale and assumes a 0.69 AUD/USD exchange rate. This steady outlook suggests confidence in the company’s operational performance despite ongoing portfolio adjustments.
The company’s focus on the SYD1 development aligns with previous regulatory approvals to expand capacity, positioning the project as a key growth driver amid strong tenant demand in the Australian market.
Bottom Line?
DigiCo’s capital recycling through the LAX sale underlines a disciplined portfolio strategy, but investors will want to monitor the timing and execution risks around the conditional sale and how swiftly the SYD1 development translates into returns.
Questions in the middle?
- Will DigiCo complete the LAX sale within the expected timeframe given customary conditions?
- How will the increased liquidity impact the pace and scale of the SYD1 development?
- What are the potential risks if the North American asset sales do not fully meet projected timelines or prices?