Digital Core REIT Delivers Resilient 2025 Full-Year Results, Announces Strategic Lease-Up and Acquisition

Key Highlights from the 2025 Results Briefing

• Full-Year Distribution Maintained: Digital Core REIT (DCREIT) declared a second-half distribution of 1.80 U.S. cents per unit, bringing the total 2025 full-year distribution to 3.60 U.S. cents. This is flat year-over-year, an impressive feat given six months of downtime at the Linton Hall facility in Northern Virginia.
• Offsetting Lost Income: The REIT managed to offset lost rental income through accretive investment activity, organic growth from lease-up and rent increases, and interest cost savings from proactive balance sheet management.
• Strategic Osaka Acquisition: In March, DCREIT closed on a 20% interest in a second data centre in Osaka, Japan. This deal generated 180 basis points of accretion, improved geographic diversification, and strengthened the portfolio’s quality and APAC presence.
• Unit Buyback Underscores Value Focus: The REIT repurchased 1.8 million units at an average price of US\$0.565—representing a 29% discount to NAV—demonstrating a focus on value creation over AUM growth. The buyback generated 10 basis points of accretion with a minimal 5 basis point increase in leverage.
• AUM Growth: Assets under management (AUM) grew 13% year-over-year, driven by the Osaka investment, robust leasing activity, and ongoing market rent growth in core global markets.

Financial and Portfolio Developments That May Drive Share Price

• Access to Public Debt Markets: Establishment of a medium-term note programme marks a pivotal advancement, offering DCREIT access to public debt capital markets and paving the way for continued asset base expansion. This move contributed to a 40-basis point reduction in the weighted average cost of debt, while leverage remains within the targeted 35%-40% range. Notably, 85% of debt is hedged against variable rates, reducing interest rate risk.
• Active Leasing and Rent Growth: In 2025, DCREIT signed new and renewal leases totaling US\$26 million in annualised rent, equivalent to over 25% of total annualised revenue at the start of the year. The portfolio experienced a strong 31% cash rental rate reversion, with top gains in Los Angeles and Northern Virginia. These positive reversions reflect persistent strong fundamentals in core markets and point to continued embedded rent growth opportunities in coming quarters.
• Linton Hall Lease-Up—A Game Changer: The highlight of 2025 was the successful lease-up of the 8217 Linton Hall facility in Northern Virginia. In January, DCREIT secured a 10-year lease with a global investment-grade cloud service provider, commencing December 2026. The new lease is expected to generate US\$14.8 million in annualised net property income (US\$13.3 million at DCREIT’s 90% share)—a 35% increase over previous rent, fueled by both reversion and a 13% increase in sellable capacity. This transaction is a testament to the Sponsor’s platform strength, cross-functional execution, and robust client relationships.

Strong Sponsor Support and Strategic Positioning

• Sponsor’s Key Role: Digital Realty, DCREIT’s Sponsor, has been instrumental in resolving customer bankruptcies and securing new leases. Sponsor support also facilitated six accretive acquisitions totaling over US\$500 million since IPO, and enabled DCREIT’s APAC expansion with the Osaka acquisition. An option to acquire an additional stake in a Frankfurt facility at an 18% discount to asset value further underscores this support.
• Stabilisation and Growth Prospects: The Linton Hall lease-up significantly stabilises DCREIT’s earnings and positions the REIT for ongoing organic and external growth via its robust acquisition pipeline.

Distribution and Valuation: Important for Shareholders

• Upcoming Distribution: A distribution of 1.80 U.S. cents per unit will be paid on 26 March to unitholders of record as at 12 February. The 2025 annual report and sustainability report will be published in late March, with the AGM scheduled for mid-April.
• Discounted Valuation—A Potential Catalyst: DCREIT units are trading at a 34% discount to NAV, with the discount even more pronounced relative to peers. All assets are held on a freehold basis, enhancing long-term value. Given the high-quality portfolio, operational expertise, and strong Sponsor backing, management asserts DCREIT is exceptionally well positioned for sustained value creation.

What Investors Should Watch

• Lease-Up of Linton Hall: The new 10-year lease will significantly lift earnings from December 2026 onwards, and the market may begin to price this in ahead of commencement.
• Potential for Further Accretive Acquisitions: With a supportive Sponsor and a robust pipeline, further deals could drive earnings and share price upside.
• Valuation Gap: The deep discount to NAV may attract value investors, especially with the REIT’s demonstrated ability to execute on growth, cost savings, and capital recycling.

Conclusion

Digital Core REIT’s 2025 results signal a fundamentally strong, well-supported, and strategically agile platform. The combination of accretive acquisitions, robust lease-up activity, disciplined capital management, and significant Sponsor backing positions DCREIT as a compelling investment opportunity. The discounted share price, upcoming distribution, and positive leasing developments are all factors that could catalyse a re-rating in the months ahead.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their individual circumstances before making investment decisions. The author and publisher are not liable for any losses arising from reliance on this information.

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