Digital Core REIT Delivers Robust FY2025 Results, Signals Strong Growth Pipeline and Market Leadership

Key Highlights for Investors

• FY2025 Distribution of 3.60 U.S. cents per Unit with a 7.06% Yield, underpinned by stable earnings and a resilient, high-quality global data centre portfolio.
• Assets Under Management (AUM) Surge to US\$1.8 Billion, representing 13% year-over-year growth, driven by strong leasing, accretive acquisitions, and market rent growth.
• Portfolio Occupancy Jumps to 97%, with a weighted average lease expiry (WALE) of 4.6 years and significant improvement in investment grade cash flow to 79%.
• Aggregate Leverage at 37.1% with over \$500 million in debt headroom available, maintaining prudent financial flexibility.
• Significant Sponsor Support demonstrated through interest-free loans, supportive asset transfers, and strategic pipeline access.
• Strategic Lease-Up of 8217 Linton Hall Road, Virginia, with a 10-year deal at a 35% rent premium, driving occupancy and cash flow accretion.
• Favourable Data Centre Market Fundamentals across core regions, with record-low vacancies and strong pricing power expected to support further growth.

Detailed Financial and Operational Review

1. Portfolio and Financial Performance

• Revenue surged 72.2% year-over-year to US\$176.2 million, and Net Property Income (NPI) rose 43.5% to US\$88.7 million. Despite a drop in net profit due to lower revaluation gains, distributable income to unitholders increased to US\$46.8 million (up 1.9% YoY).
• Net Asset Value (NAV) per Unit increased to US\$0.80 (from US\$0.79), with a closing unit price of US\$0.510, representing a significant discount to NAV and a compelling 7.06% distribution yield.
• Debt metrics remained healthy: Aggregate leverage was 37.1%, average cost of debt 3.5%, and interest coverage ratio 3.5x. 85% of debt is fixed-rate, and the weighted average debt maturity stands at 3.7 years.
• Unit buyback activity: The REIT repurchased 1.8 million units at an average price of US\$0.565 during FY2025, resulting in DPU accretion.

2. Portfolio Strength and Strategic Transactions

• 11 Data Centres across the U.S., Canada, Germany, and Japan, with 100% freehold assets and >120 customers, including major global cloud and technology firms.
• Key customer profile: 79% of rental income is from investment-grade or equivalent credit, with the top 10 customers contributing 86% of annualized rent. The largest tenant (a Fortune 50 software company) accounts for 30.8% of rent.
• Significant lease-up at 8217 Linton Hall, Virginia:
  • 10-year lease with an investment-grade global cloud provider secured within 6 months of previous tenant churn.
  • Achieved a 35% increase in net rent and expanded capacity by 13% to 10.8MW, increasing portfolio occupancy from 81% to 98% and extending WALE to 5.5 years.
• Toronto customer bankruptcy successfully resolved with sponsor providing a five-year, interest-free loan to backstop cash flow, averting near-term distribution risk.
• Acquisition of 20% stake in Digital Osaka 3 for US\$87 million, deepening APAC exposure and enhancing portfolio quality and diversification.
• Additional 15.1% interest in Frankfurt facility acquired at an 18% discount to appraised value, underscoring sponsor commitment and creating DPU accretion.

3. Market Trends and Growth Catalysts

• Record-low vacancies and escalating rents in core markets such as Northern Virginia, Silicon Valley, Frankfurt, Toronto, Los Angeles, and Osaka.
• Favourable supply-demand dynamics: Land and power constraints in major hubs drive up land values and pricing; new regulatory frameworks (e.g., Ontario Bill 40) are likely to tighten future supply and support rental growth.
• Macro tailwinds from AI and digital transformation: Data centre capacity demand is forecast to triple for AI workloads by 2030; Digital Core REIT’s platform is well-positioned to benefit from this exponential growth.
• Global right of first refusal (ROFR) pipeline exceeds US\$15 billion, giving Digital Core REIT access to highly accretive assets for future growth.

4. AGM Resolutions and Shareholder Actions

• Annual General Meeting (AGM) scheduled for 15 April 2026: Shareholders will vote on key resolutions, including the adoption of audited financials, re-appointment of KPMG as auditors, authorisation to issue units, and renewal of the unit buy-back mandate.
• Important dates: Ex-date for distribution is 11 February 2026; payment on 26 March 2026. Proxy forms must be submitted by 12 April 2026. Registration for AGM opens at 8:30 a.m. on 15 April 2026 at NTUC Centre, Singapore.

Potential Price-Sensitive Issues for Shareholders

• Resolution of tenant churn and bankruptcy risk in Toronto and Virginia, with swift lease-ups and sponsor support, removes major uncertainties and supports income stability.
• Discounted asset acquisitions and unit buybacks are DPU accretive and may drive re-rating as the market recognises the underlying value and growth potential.
• Access to a \$15+ billion global pipeline positions the REIT for outsized future growth, particularly as AI and cloud infrastructure demand accelerates.
• Favourable regulatory and market trends in core geographies support further rental growth and asset value appreciation.

Outlook

Digital Core REIT is poised for continued sustainable growth, with a strong sponsor, robust balance sheet, accretive acquisitions, and a high-quality, diversified portfolio. Its access to a substantial acquisition pipeline and favourable market fundamentals provide significant upside as digital transformation and AI drive unprecedented demand for data centre infrastructure globally.

Disclaimer

This article is for informational purposes only and does not constitute investment advice, an offer, or solicitation to buy or sell any securities. Investors should conduct their own due diligence and consult with their financial advisors before making investment decisions. The information is based on the April 2026 Digital Core REIT investor report and is believed to be accurate as of the date of publication but is subject to change without notice.

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