Highlights

  • DigiCo agreed to sell its Chicago CHI1 data centre for US$750 million at a ~5% premium to its November 2024 purchase price, expected to close in Q1 FY27.
  • Pro forma gearing is expected to reduce from 36% to approximately 17% following the sale, with available liquidity increasing to approximately A$0.9 billion.
  • Capital released from the US asset sale will be redeployed into the SYD1 88MW development, which the company describes as its most compelling growth opportunity, with 10MW of capacity targeting delivery in Q2 CY2027.

 

DigiCo Infrastructure REIT (ASX:DGT) is a diversified owner, operator, and developer of data centres, managed by HMC Capital and listed on the ASX. The fund holds a global portfolio with a broad investment mandate spanning stabilised, value-add, and development opportunities across the data centre asset class. Its portfolio includes facilities in the United States — Chicago (CHI1), Kansas City (KCM1), and Dallas Fort Worth (DAL1) — as well as land sites in Los Angeles (LAX1 and LAX2), and its flagship Australian asset, the SYD1 data centre in Sydney. The company listed with an ambitious strategy to build a diversified global data centre portfolio, and the May 2026 announcement of the CHI1 asset sale represents a strategic pivot toward capital recycling and domestic development intensity rather than geographic diversification for its own sake.

The CHI1 Sale: Terms and Financial Impact

On 6 May 2026, DGT announced it had entered into a binding agreement with a North American fund manager experienced in data centres to sell the Chicago CHI1 facility for US$750 million. This price represents a premium of approximately 5% to the November 2024 purchase price at which DGT acquired the asset, implying modest capital appreciation over a holding period of approximately 18 months. The sale was described by the company as representing a passing yield of 5.8% and being in line with the all-in carrying cost of the asset. The transaction is expected to reach financial close in the first quarter of FY27.

The net cash proceeds from CHI1, after repayment of asset-level debt, are expected to be approximately A$360 million, assuming a 0.71 AUD/USD exchange rate. On a pro forma basis using actual net debt as at 30 April 2026 and adjusted for anticipated sale proceeds, DGT's net debt is expected to decline from $1.5 billion (as at 31 December 2025) to approximately $0.5 billion. This would reduce the company's gearing ratio from 36% to approximately 17%, a dramatic improvement in balance sheet conservatism that significantly expands DGT's financial flexibility.

LAX Sites and Remaining US Portfolio

In addition to the CHI1 binding agreement, DGT disclosed that it has determined to monetise the Los Angeles LAX1 and LAX2 sites and is exploring options to realise value for these assets. No binding agreement has been announced for these sites, and the company indicated it will keep investors informed on developments. The Kansas City (KCM1) and Dallas Fort Worth (DAL1) data centres are described as continuing to deliver acceptable stabilised asset returns, and DGT intends to actively manage these assets over the medium term with a focus on value maximisation. The selective nature of the US divestment program — retaining KCM1 and DAL1 while exiting CHI1 and pursuing LAX monetisation — suggests a deliberate curation of the remaining portfolio rather than a wholesale US exit.

SYD1: The Strategic Redeployment Priority

The proceeds from the US asset sales are being redirected into the acceleration of the SYD1 development program in Sydney, which DGT describes as its most compelling growth opportunity. SYD1 is a network-dense colocation facility with approximately 120 interconnected networks, and it achieved Certified Strategic status under the Australian Government's Hosting Certification Framework — a recognition that provides competitive advantages in attracting government and regulated enterprise clients.

The SYD1 expansion program targets 88MW of total capacity. As at the announcement date, practical completion had been achieved for the first 15MW of a 20MW upgrade, with the remaining 5MW on track for delivery before 30 June 2026. The broader 88MW program is advancing through design, with the 70% design milestone reached and head contractor appointment expected in Q3 of calendar year 2026. The first 10MW tranche of the expansion is targeting delivery in Q2 CY2027, with the remaining capacity to be delivered progressively over the following three years. Management describes the demand pipeline for the remaining capacity as healthy.

Capital Management and Enhanced Distributions

With gearing expected to fall to approximately 17% following the CHI1 settlement, DGT finds itself in a materially stronger balance sheet position than its target gearing range would require. This has prompted the company to disclose its intention to explore capital management initiatives, including distributing any excess capital through enhanced distributions in the short term above its Funds From Operations (FFO). Over the medium term, DGT maintains its distribution policy of paying 90% to 100% of FFO and has committed to delivering sustainable and growing returns. For investors, the prospect of a near-term enhanced distribution represents a tangible, near-term return of capital, while the longer-term narrative is anchored on SYD1 EBITDA and FFO growth as the expanded facility is progressively leased and commissioned.

Financial Guidance

DGT reaffirmed its FY26 Underlying EBITDA guidance of $125 million, which includes the full-year contribution from CHI1 prior to its sale and assumes a 0.69 AUD/USD exchange rate. Looking ahead to FY27, the US asset sales are described as expected to be materially FFO accretive, reflecting the combination of reduced interest costs associated with lower gearing and the redeployment of capital into the higher-returning SYD1 development. The company believes the strengthened balance sheet position, combined with anticipated SYD1 earnings growth over the next four years, supports an enhanced yield and growth proposition for investors.

Conclusion

DigiCo Infrastructure REIT has executed a significant capital recycling transaction with the binding sale of CHI1 for US$750 million, materially reducing gearing from 36% to a pro forma 17% and generating liquidity to accelerate the SYD1 expansion program. The company has reaffirmed FY26 EBITDA guidance, flagged near-term enhanced distributions, and articulated a credible pathway to FY27 FFO accretion. With the SYD1 development progressing through design milestones and a healthy demand pipeline, DGT enters the second half of FY2026 with a considerably lighter balance sheet and a more concentrated strategic focus. Investors following the data centre REIT sector will find DGT's capital recycling and SYD1 growth narrative worth monitoring closely.