Highlights

  • Bell Potter Securities (Institutional) has issued a Buy rating on DigiCo Infrastructure REIT with a price target of AUD 3.40, representing approximately 24.5% upside from the current unit price of AUD 2.73 as at 11 May 2026.
  • DGT has executed a binding sale of its Chicago (CHI1) data centre for US$750 million, expected to reduce net Debt from approximately AUD 1.5 billion to AUD 0.5 billion and gearing from 36% to 17%, significantly strengthening the trust's Balance Sheet and Liquidity position.
  • The accelerated SYD1 development program at 88 megawatts remains a cornerstone growth catalyst, with practical completion of the first 15 megawatts of a 20 megawatt upgrade confirmed, and the remainder expected by 30 June 2026.

 

DigiCo Infrastructure REIT (ASX:DGT), the ASX-listed data centre-focused real estate Investment trust, has endured a challenging twelve months on the bourse. As at 11 May 2026, DGT units are trading at AUD 2.73, having declined 12.22% over the prior year. The trust shed a further AUD 0.04, or 1.44%, on 11 May alone, reflecting persistent selling pressure that has seen DGT trade well below its net asset value. Despite this, institutional broker Bell Potter Securities maintains a Buy rating with a price target of AUD 3.40 — a target that carries approximately 24.5% implied upside from current levels.

DGT's year-long underperformance has coincided with a period of strategic recalibration by management. The trust, which was established with a focus on owning and developing hyperscale and colocation data centres across Australia and North America, has moved decisively to reposition its balance sheet and concentrate Capital into its highest-returning domestic opportunity — the SYD1 Facility in Sydney. A series of capital recycling announcements, most notably the binding sale of its Chicago data centre asset, have reshaped the investment case and may represent a turning point for the stock.

Share Performance: Twelve Months of Headwinds

DGT's 12.22% decline over the past year reflects a combination of macro pressures bearing on Yield-sensitive securities and stock-specific concerns around gearing levels and the execution trajectory of its development pipeline. For much of the past twelve months, the trust has traded at a discount to its Net Asset Value (NAV), with investors pricing in execution risk on its complex data centre developments and uncertainty around the optimal Capital Structure for a trust with significant offshore asset exposure.

The trust's recent capital management activities — particularly the CHI1 binding sale — directly address many of these concerns. Management has been explicit that the strategic rationale for the US asset sales includes closing the discount to NAV through a strengthened balance sheet, enhanced distributions, and a sharper focus on the highest-returning Assets. The market's response to these announcements will be closely watched as a gauge of whether the strategic pivot is being reflected in unit price recovery.

The CHI1 Sale: A Capital-Transforming Transaction

The most significant recent development for DGT is the binding agreement to sell its Chicago (CHI1) data centre facility to a North American Fund Manager for US$750 million. The sale represents approximately a 5% premium to the November 2024 purchase price and is valued in line with the asset's all-in carrying cost. The transaction is expected to reach financial close in the first quarter of FY27.

The transformational impact of the sale on the trust's balance sheet cannot be overstated. Net cash proceeds of approximately AUD 360 million are expected post repayment of asset-level debt, driving pro forma net debt down from approximately AUD 1.5 billion as at 31 December 2025 to around AUD 0.5 billion. Gearing is expected to reduce from 36% to approximately 17%, and available liquidity is projected to increase to approximately AUD 0.9 billion. This recapitalised position provides DGT with the financial flexibility to fully fund the 88-megawatt SYD1 development program while maintaining gearing comfortably within its target range.

In addition, DGT is exploring Options to monetise its LAX1 and LAX2 sites in Los Angeles, while the Kansas City (KCM1) and Dallas Fort Worth (DAL1) data centres are being actively managed to maximise value for securityholders over the medium term. The overall direction is a deliberate concentration of the portfolio toward Australian assets — particularly SYD1 — where the trust has demonstrated development capability and where market fundamentals are compelling.

Balance Sheet and Capital Management: From Leverage to Liquidity

The improvement in DGT's financial position following the CHI1 transaction is expected to materially change the trust's risk profile. With net debt projected to fall to approximately AUD 0.5 billion and available liquidity rising to AUD 0.9 billion, DGT will be in a substantially more defensive capital position — one that not only removes near-term funding concerns but also provides capacity for the extensive SYD1 construction program without requiring additional Equity issuance at current depressed prices.

Management has also signalled an intention to explore capital management initiatives including returning excess capital to securityholders through enhanced distributions in the short term above FFO. Over the medium term, DGT maintains its distribution policy of paying out 90 to 100% of FFO, with the stated goal of delivering sustainable and growing returns. The prospect of enhanced near-term distributions could be a meaningful catalyst for re-rating, particularly among income-oriented investors who have been cautious about the trust's elevated gearing over recent periods.

SYD1: The Growth Engine

The SYD1 data centre in Sydney is central to DGT's growth thesis. The facility has achieved 'Certified Strategic' status under the Australian Government's Hosting Certification Framework, a designation that enhances its appeal to sovereign and enterprise customers requiring secure, government-certified infrastructure. Practical completion for the first 15 megawatts of the current 20-megawatt upgrade has been confirmed, with the remaining 5 megawatts on track for delivery prior to 30 June 2026.

The longer-term development at SYD1 is targeted at 88 megawatts in total — a substantial expansion program that management describes as the most compelling growth opportunity in its portfolio. The facility's position as a globally relevant, network-dense colocation data centre in a Tier 1 market, with interconnection supporting approximately 120 networks, provides a structural Competitive Advantage in attracting high-quality, long-term tenants. With the capital position now being significantly strengthened via the US asset sales, DGT is well placed to accelerate SYD1's buildout into sustained customer Demand.

Outlook: Strategic Repositioning Creating a Cleaner Investment Story

DGT's strategic repositioning — shedding offshore assets to fund the domestic SYD1 development, dramatically reducing gearing, and exploring enhanced distributions — creates a materially cleaner and more focused investment proposition than existed twelve months ago. The trust's exposure to Australia's data centre infrastructure market, where demand driven by hyperscale cloud adoption, artificial intelligence workloads, and enterprise digitalisation continues to grow strongly, positions it in a high-conviction secular theme. US asset sales are expected to be materially FFO accretive from FY27, providing Earnings tailwinds that coincide with SYD1 project completions coming through.

Conclusion

DigiCo Infrastructure REIT has endured twelve months of share price weakness that has pushed it to a meaningful discount relative to the strategic value of its assets and development pipeline. The binding sale of CHI1 at a premium to purchase price, the resultant balance sheet transformation, the accelerating SYD1 program, and the signalled capital management initiatives collectively represent a significant inflection point in the trust's trajectory. Bell Potter Securities' Buy rating and AUD 3.40 target price reflect institutional confidence that the market has underpriced the restructured investment case — and that the combination of lower gearing, higher liquidity, improved distributions, and a focused domestic development pipeline provides a credible pathway for unit price recovery.