Digital Core REIT FY2025 Financial Results: Strong Growth Amid Sector Tailwinds

Date: 4 February 2026

Key Financial Metrics and Performance Highlights

• Assets Under Management (AUM): \$1.8 billion (at 31 December 2025)
• Occupancy Rate: 97% (as at 31 December 2025)
• Weighted Average Lease Expiry (WALE): 4.6 years (in-service portfolio)
• Aggregate Leverage: 37.1%
• Debt Headroom: +\$500 million (at 50% aggregate leverage)
• Distribution per Unit (DPU): 3.60 US cents for FY2025
• Unit Buyback: 1.8 million units repurchased at \$0.565, delivering 0.1% DPU accretion
• Same-Store Constant-Currency AUM Growth (2022-2025): \$540 million
• Balance Sheet: \$2.25 billion total assets, \$1.07 billion unitholders’ funds

Year-over-Year and Quarter-over-Quarter Financial Comparison

Historical Performance Trends

• AUM Growth: 13% YoY, driven by robust leasing and market rent growth across the portfolio.
• Portfolio Valuation: Steady year-over-year growth for most assets, except a decline for one Silicon Valley property (-10.1%).
• Occupancy: Increased, with examples like the Northern Virginia Linton Hall facility improving portfolio occupancy from 81% to 98% after a major lease-up.
• Customer Quality: 79% of rent from investment grade or equivalent tenants; top 10 customers account for 86% of annualized rent.

Exceptional Earnings or Expenses

• Net Fair Value Change in Investment Properties: Fell sharply to \$22.0 million from \$251.6 million the previous year, impacting net profit.
• Other Income: Declined sharply due to consolidation effects from the Frankfurt site.
• Remeasurement Loss: \$3.7 million in 2025 versus \$11.1 million in 2024.

Share Buybacks and Capital Actions

• Repurchased 1.8 million units at an average price of \$0.565, adding 0.1% to DPU.
• Established a \$750 million euro medium-term note program, expanding access to public debt markets.

Balance Sheet and Debt Profile

• Aggregate Leverage: 37.1%, leaving significant debt headroom.
• Average Cost of Debt: 3.5%
• Interest Coverage Ratio: 3.5x
• Weighted Avg. Debt Maturity: 3.7 years
• All debt unsecured; 85% fixed-rate.

Corporate Actions, Events & Sponsor Support

• Lease-Up Success: Full lease-up of Linton Hall, Northern Virginia, increasing occupancy and net rent by 35% within six months of customer churn.
• Resolution of Customer Bankruptcy: Provided interest-free loan to backstop Toronto cash flow and successfully resolved a major customer bankruptcy.
• Portfolio Expansion: Invested \$87 million for a stake in a second Osaka data centre, improving APAC diversification.
• Sponsor Actions: Sponsor agreed to contribute additional interest in Frankfurt facility at an 18% discount to appraised value.

Dividend and Distribution Details

• FY2025 Distribution: 3.60 US cents per unit (unchanged YoY)
• Distribution Yield: 7.06% (up from 6.21% in FY2024)
• Distribution Payment Date: 26 March 2026

Macroeconomic & Regulatory Developments Affecting Business

• Sector Trends: AI and digital economy expected to drive continued growth in digital spending and infrastructure demand.
• Regulatory Changes: Ontario Bill 40 introduces new grid connection screening for Toronto, potentially tightening supply and increasing barriers for new entrants.
• Development Constraints: Power infrastructure scarcity in Northern Virginia and regulatory hurdles may impact future supply and pricing dynamics.
• Global Expansion: Significant investments in Frankfurt, Osaka, and Northern California indicate sustained demand.

Chairman’s Statement

No explicit Chairman’s Statement was included in the report. The overall tone conveyed by management and sponsor communications throughout the report is positive, emphasizing proactive portfolio management, successful resolution of customer bankruptcies, continued sponsor support, and robust sector fundamentals driving future growth.

Conclusion and Investor Recommendation

Overall Financial Performance and Outlook: Digital Core REIT delivered strong operational results in FY2025, with significant revenue and NPI growth, near-full occupancy, and positive distribution yield trends. The year saw successful lease-up activities, strategic asset acquisitions, and effective management of customer credit events. While net profit declined sharply, this was primarily due to a lower fair value change in investment properties, not core operating weakness. The REIT maintains a healthy balance sheet, prudent leverage, and substantial debt headroom to fund future growth. Sector fundamentals remain favorable, driven by AI and cloud infrastructure demand, though regulatory and utility challenges may affect the pace of expansion in some markets.

Investor Recommendations

• If you currently hold shares:
  
  The REIT remains well-positioned for long-term, sustainable growth, offering a solid yield (7.06%) and strong occupancy. Continued sponsor support, balance sheet strength, and sector tailwinds support a hold recommendation. Investors should monitor developments in regulatory and utility constraints, but the overall risk profile remains attractive.
• If you do not currently hold shares:
  
  The current valuation (trading at a discount to NAV and offering a robust yield) may present a compelling entry point for income-focused investors seeking exposure to core data centre assets in high-growth global markets. Consider initiating a position, provided you are comfortable with sector-specific risks and regulatory developments.

Disclaimer: This analysis is based solely on information disclosed in the FY2025 report. It does not constitute investment advice. Investors should perform further due diligence and consider their individual risk profiles before making investment decisions.

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