Digital Core REIT - UOB Kay Hian 2025-01-08: Successful Backfilling At Toronto & Los Angeles Not Fully Appreciated

• Investors have overlooked a few positive developments Digital Core REIT announced during the festive season in Dec 24.

Increases stake in Frankfurt data centre from 49.9% to 65.0%.

• - Read this at SGinvestors.io -
• Geographically, data centres in Germany and Japan have expanded by 5ppt to 39% of annualised rent (Frankfurt: 32%, Osaka: 7%). The reliance on North America has correspondingly been reduced from 66% to 61%.

Frankfurt data centre close to full occupancy.

• - Read this at SGinvestors.io -
• Occupancy for the Frankfurt data centre improved 6.3ppt q-o-q to 98.5% in 2Q24 after signing several new leases. There is growth potential to lease-up the remaining vacant space of 1.5%.

Positive impact on DPU and NAV.

• The Frankfurt data centre generated NPI of €13.4m (US$14.7m) in 1H24. The additional stake provides an attractive NPI yield of 5.7%.
• The purchase consideration represents a discount of 17.8% to the latest valuation of US$628.7m. The acquisition is funded by a Euro-denominated term loan at an all-in cost of 3.6% and is estimated to be accretive to pro forma 2023 DPU by 3.1%.
• NAV per Digital Core REIT unit would increase 4.3% to US$0.72. Aggregate leverage would rise by 2.1ppt to 36.6%.

Completed backfilling of Toronto data centre.

• Read more at SGinvestors.io.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2025-01-08 SGinvestors.io

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