DigiCo Infrastructure REIT is using US asset sales to lower leverage and concentrate capital on its Australian data centre pipeline, led by the fully funded 88MW SYD1 project. The strategy comes alongside a $100.8 million statutory loss, higher distributions and FY27 guidance for 15.0 cents per security.
- Underlying EBITDA reached $126.6 million in FY26
- US asset sales are expected to reduce pro forma gearing to 18%
- SYD1’s next 52MW expansion is planned for FY27 and FY28
- FY27 distribution guidance rises 25% to 15.0 cents per security
- DigiCo disclosed no climate targets or transition plan for FY26
US asset sales reshape DigiCo’s growth platform
DigiCo Infrastructure REIT (ASX:DGT) is turning a portfolio reshuffle into its central growth argument: sell selected US assets, reduce debt and direct capital towards Australian data centres. The group reported a $4.1 billion independent portfolio valuation at 30 June 2026 and said its US asset sales will lift available liquidity to about $1.2 billion on a pro forma basis, while reducing gearing from 39% to an estimated 18%, subject to transaction costs, completion adjustments and the relevant settlements.
The Chicago transaction is no longer merely prospective. The sale of CHI1 for US$750 million completed on 10 September 2026. The proposed sale of the LAX1 and LAX2 sites remains conditional and is expected to complete in the first half of FY27, with the sale price broadly in line with acquisition cost. The annual report describes both transactions as capital recycling from lower-yielding assets into the higher-returning SYD1 development.
SYD1 expansion carries the earnings case
The Australian platform finished FY26 with 85MW of contracted capacity across 12 properties, including a fully contracted SYD1. DigiCo completed the first 20MW of the SYD1 upgrade on time and on budget, then signed letters of intent covering the remaining 52MW of its 88MW expansion. That capacity is targeted to be delivered in phases through FY27 and FY28, with the first 10MW tranche expected online and income-producing by the end of FY27.
The group says the broader SYD1 project is fully funded through existing balance sheet capacity and committed facilities, with no new equity required. A further 15MW brownfield expansion at ADL1 is also progressing amid advanced customer discussions. Management estimates that the Australian platform could eventually produce approximately $250 million of stabilised EBITDA once SYD1 and ADL1 reach stabilised occupancy and all contracted capacity is online and billing. That remains an estimate dependent on delivery, occupancy and customer conversion rather than a reported financial result.
Cash earnings improved despite another statutory loss
FY26 underlying EBITDA rose to $126.6 million, while funds from operations reached $90.5 million and adjusted FFO, which DigiCo defines as available capital for distribution, was $70.8 million. The group declared 12.0 cents per security, split evenly between interim and final distributions. For FY27, it has guided to underlying EBITDA of $120 million to $125 million and distributions of 15.0 cents per security, representing stated distribution growth of 25%.
The statutory numbers are less tidy. DigiCo recorded a $100.8 million loss after tax, compared with a $67.9 million loss for the prior period, although the comparison is limited because FY25 covered only the period from 1 November 2024 to 30 June 2025. The FY26 result included $105.4 million of depreciation and amortisation, $44.0 million of asset write-offs and impairment, a $10.7 million fair value loss and $83.9 million of net finance costs. The balance sheet carried $1.835 billion of drawn debt at year end, with all debt hedged or fixed and gearing at 38.9%.
Climate reporting identifies exposure without targets
DigiCo’s first mandatory climate report identified regulatory and climate policy mandates, and water scarcity, as the two climate-related risks reasonably expected to affect its prospects. The report assessed $3.665 billion, or 83% of total assets, as vulnerable to both transition and relevant physical risks, while cautioning that this is a portfolio-level exposure measure rather than an estimate of financial loss.
The disclosure also says DigiCo had not set quantitative or qualitative climate-related targets, did not have an approved transition plan and had not identified any climate-related opportunities that could reasonably be expected to affect its prospects at 30 June 2026. Reported Scope 1 and location-based Scope 2 emissions were 621 tonnes and 69,183 tonnes of carbon dioxide equivalent respectively, with North American assets excluded from the operational emissions boundary because of their lease arrangements.
Bottom Line?
DigiCo has made the strategic choice clear; FY27 will test whether lower leverage and concentrated Australian investment can translate into the guided distribution uplift while SYD1 capacity comes online.
Questions in the middle?
- Will the conditional LAX1 and LAX2 sale complete on the expected FY27 timetable?
- Can DigiCo convert the SYD1 letters of intent into signed contracts and revenue-producing capacity?
- How will the group’s climate strategy develop as power, water and approval requirements become more material to data centre expansion?