Digital Core REIT reported 1HFY25 DPU of 1.80 US cents, in line with consensus and our estimates.
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Steady DPU, in line with our projections.
Revenues grew by 84.2% y-o-y to US$ 88.9mil, lifted by the expanded stake in Frankfurt (now 65%) and new income stream from Osaka KIX12 (20% stake), acquired in March 2025. However, property expenses surged over 100% y-o-y, with utilities, maintenance and repairs, and other expenses up markedly across the portfolio. This compressed margins, even as NPI grew 52.2% y-o-y to US$ 46.3mil.
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Portfolio occupancy driven by healthy demand in LA.
Portfolio occupancy improved 0.3ppt q-o-q to 98.0%. This was entirely driven by the leasing at 3015 Winona Avenue (LA) which brought its occupancy up from 79.3% to 84.0% q-o-q.
All assets across Northern Virginia, Silicon Valley, and Toronto maintained full occupancy. The Osaka portfolio remained resilient at 97.6%, with the only vacancies at Digital Osaka 2. The overall WALE remained healthy at 4.5 years, offering income stability.
That said, the lease at Linton Hall (Northern Virginia) expired on 30 June 2025 and the tenant vacated in July. This has already been previously highlighted, and Digital Core REIT will commence AEIs at the property estimated to cost between US$30mil – 40mil.
Apart from the vacating at Linton Hall, there will be minimal lease expiries for the rest of FY25, with only ~3% of leases (on an annualised rent basis) due in 2H25.
Improvement works at Linton Hall DC expected to take up to 15 months.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
