DigiCo Infrastructure REIT slashes debt after Chicago asset sale

The DigiCo Infrastructure REIT Staples Securities (ASX: DGT) share price is in focus after the company announced the binding sale of its Chicago (CHI1) asset for US$750 million, representing a ~5% premium to its original purchase price, and detailed a significant reduction in gearing and debt levels.

What did DigiCo Infrastructure REIT report?

• Binding sale agreement for the Chicago (CHI1) facility at US$750 million (~A$1.06 billion), about 5% above purchase price
• Pro forma net debt reduced from A$1.5 billion to around A$0.5 billion
• Gearing reduced from 36% to 17%; available liquidity to rise to approximately A$0.9 billion
• Funds From Operations (FFO) expected to materially increase from FY27 due to US asset sales
• Reaffirmed FY26 underlying EBITDA guidance of $125 million
• Intention to consider enhanced distributions and additional capital management initiatives

What else do investors need to know?

DigiCo Infrastructure REIT is executing a strategic capital recycling plan by selling US assets—most notably the CHI1 facility—to free up cash and further fund its core Australian data centre development, SYD1. The company also plans to monetise its LAX1 and LAX2 sites, with ongoing value management of other US data centres.

Completion of the first 15MW upgrade at SYD1 is now achieved, and the final 5MW section remains on track for delivery by 30 June 2026. The company’s strong pipeline and upgraded capacity at SYD1 highlight its focus on supporting high customer demand for premium colocation services.

What did DigiCo Infrastructure REIT management say?

Interim CEO Chris Maher said:

The release of capital from CHI1 provides additional financial flexibility and capacity to accelerate the delivery of the SYD1 development program. The 88MW project has progressed further, with design and tender documentation for the expansion continuing to advance, the 70% design milestone now achieved and a head contractor to be appointed in Q3 CY2026. The remaining capacity is planned to be delivered progressively over the next three years, with 10MW of capacity targeting delivery in Q2 CY2027. The demand pipeline for the remaining capacity is strong and expected to generate attractive returns.

What’s next for DigiCo Infrastructure REIT?

Looking ahead, DigiCo expects the US asset sales—and the resulting balance sheet strength—to support its major SYD1 data centre expansion and boost funds from operations from FY27 onwards. Management signalled a possible increase in distributions to shareholders in the short term, alongside a long-term strategy to pay out 90–100% of FFO.

The firm plans to progressively deliver the remaining SYD1 capacity by 2029, backed by strong customer demand and a focus on sustainable, growing distributions for investors.

DigiCo Infrastructure REIT share price snapshot

Over the past 12 months, DigiCo shares have declined 17%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 6% over the same period.

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The post DigiCo Infrastructure REIT slashes debt after Chicago asset sale appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.