Key Highlights

  • DigiCo Infrastructure REIT (ASX: DGT) agreed to sell its Chicago CHI1 data centre for US$750 million, with settlement expected in the first quarter of FY27.
  • The company has also contracted the sale of its Los Angeles LAX1 and LAX2 land holdings, with completion expected in the first half of FY27.
  • Pro forma gearing could fall from 36% to 17% after both transactions settle, but the balance sheet improvement has not yet been reflected in reported figures.
  • Sydney SYD1 remains the key growth asset as DigiCo transitions capital towards contracted data centre expansion.

DigiCo Infrastructure REIT (ASX: DGT) has begun reshaping its portfolio after agreeing to sell its Chicago data centre asset for US$750 million and contracting the sale of its Los Angeles development sites.

The transactions represent a significant change in direction for the data centre owner, which listed on the Australian Securities Exchange in December 2024 with a portfolio built around artificial intelligence, cloud computing and digital infrastructure demand.

However, while the proposed asset sales could materially reduce leverage, the financial impact is dependent on settlement. As of 27 July 2026, neither the Chicago nor Los Angeles transactions had completed.

The company’s securities have traded well below the original listing price, with the stapled security changing hands at around A$2.60 in late July 2026 compared with the A$5.00 issue price.

Against this backdrop, the asset recycling strategy is aimed at strengthening the balance sheet and directing capital towards assets with clearer customer demand.

Understanding DigiCo’s REIT Structure

DigiCo Infrastructure REIT operates as a stapled security structure, combining a property trust with an operating company.

A real estate investment trust structure allows investors to own income-producing property assets while receiving distributions generated from rental income and related operations.

The stapled structure allows DigiCo to combine property ownership with active infrastructure operations, including development and management of data centre facilities.

The company listed with 13 data centres across Australia and North America, including assets acquired from Global Switch Australia, iseek and several US facilities.

The investment case at listing was based on long-term demand growth from cloud providers, hyperscale technology companies and artificial intelligence infrastructure requirements.

Chicago CHI1 Sale Provides Potential Deleveraging Catalyst

On 6 May 2026, DigiCo announced that it had entered into an agreement to sell its Chicago CHI1 data centre for US$750 million.

CHI1 is a 32 megawatt facility leased to a hyperscale customer under a 15-year agreement. The sale price represented approximately a 5% premium to the acquisition price paid in November 2024, based on the company’s disclosures.

The transaction was agreed with an unnamed North American fund manager specialising in data centres.

However, the sale remains conditional. DigiCo expects financial close in the first quarter of FY27, meaning the proceeds had not been received as of late July 2026.

The company expects the transaction to generate approximately A$360 million in net cash after repayment of asset-level debt.

The proceeds are intended to reduce borrowings and provide additional flexibility for future investment.

Los Angeles Exit Removes Development Uncertainty

DigiCo also moved to exit its Los Angeles land holdings by contracting the sale of LAX1 and LAX2 on 12 June 2026.

The assets were carried at approximately US$71 million at 31 December 2025 and are expected to be sold at a price broadly in line with acquisition cost.

The decision followed uncertainty around the future development pathway after DigiCo withdrew the LAX1 development application in April 2026.

The company had faced planning challenges after local authorities indicated that approval for data centre use was uncertain.

The sale removes a development asset that lacked a clear near-term path and allows DigiCo to focus resources on locations where customer demand is already developing.

Completion of the Los Angeles transaction is expected during the first half of FY27.

Balance Sheet Improvement Depends on Settlement Timing

The potential financial impact of the asset sales is significant.

DigiCo has indicated that completion of both the Chicago and Los Angeles transactions could reduce pro forma gearing from 36% to 17%.

Net debt could fall from approximately A$1.5 billion at 31 December 2025 to around A$500 million after the Chicago sale.

Available liquidity was expected to increase to approximately A$900 million following Chicago settlement and about A$1 billion after the Los Angeles transaction completes.

However, these figures remain forward-looking. Until settlement occurs, DigiCo’s reported balance sheet continues to reflect existing debt levels.

The company’s gearing was already within its stated target range of 35% to 45%, meaning the planned reduction represents a strategic capital allocation decision rather than an immediate balance sheet requirement.

Sydney SYD1 Becomes Central Growth Asset

Following the planned asset sales, Sydney SYD1 is emerging as DigiCo’s main expansion opportunity.

The company has been upgrading the Sydney campus, with practical completion achieved on the first 15 megawatts of a planned 20 megawatt upgrade.

A larger 88 megawatt development remains in progress, with design work approximately 70% complete.

DigiCo expects to appoint a head contractor during the third quarter of calendar 2026, with approximately 10 megawatts of additional capacity targeted by the second quarter of 2027.

Demand indicators have remained positive. In October 2025, DigiCo announced 14 megawatts of new contracts across Sydney, Brisbane and Adelaide involving hyperscale, neocloud, enterprise and government customers.

The company also increased its Australian contracted capacity target to 41 megawatts by June 2026 from 27 megawatts previously.

Distribution Policy and Leadership Change

DigiCo declared a second-half FY26 distribution of 6.0 cents per stapled security, with payment expected on or around 28 August 2026.

The company’s distribution policy targets payment of 90% to 100% of free funds from operations.

Management has also discussed the possibility of enhanced distributions during FY27 from surplus capital, although no specific amount has been provided.

The company also experienced a leadership change in June 2026 when chief executive Michael Juniper stepped down effective 26 June.

A search for a permanent replacement is underway, with interim leadership currently managing the company’s transition phase.

The leadership change comes at a critical period as DigiCo executes asset sales, reduces leverage and advances its Sydney development pipeline.

FY26 Earnings Outlook and Upcoming Results

DigiCo reaffirmed FY26 underlying EBITDA guidance of A$125 million.

For FY25, the company reported annualised underlying EBITDA of A$99 million and distributions of 10.9 cents per security.

The FY26 financial results, scheduled for release on 21 August 2026, will provide further detail on operational performance, leasing progress and the impact of recent strategic changes.

The results will also be important for assessing whether contracted customer demand is translating into revenue growth across the portfolio.

Conclusion

DigiCo Infrastructure REIT (ASX: DGT) has taken steps to reshape its portfolio through the proposed sale of CHI1 in Chicago and its Los Angeles land holdings. The transactions could significantly reduce gearing and provide additional capital flexibility, but the improvement remains dependent on settlement.

The company’s next phase is focused on directing resources towards Sydney SYD1 and converting data centre demand into contracted capacity. While the asset sales provide a potential balance sheet reset, execution of the transactions, leadership transition and delivery of new capacity will determine whether DigiCo can rebuild investor confidence following a difficult period since listing.