Digital Core REIT has announced a strategic transaction to enter the Singapore market and expand its presence in Japan, whilst reducing its North American asset concentration. The REIT will sell interests in three North American data centres, generating approximately $316m in gross proceeds. These funds will be redeployed to acquire a 2.5% interest in 11 Loyang Close, Singapore, and an additional 25% interest in Digital Osaka 3, Japan, increasing its stake in the latter to 45%.
The transaction is expected to deliver a 4.1% increase in Distribution Per Unit (DPU) and reduce aggregate leverage by nearly 300 basis points, from 39.2% to 36.3%. The move will also double Digital Core REIT’s concentration in the Asia Pacific region. The net proceeds of approximately $140m will be used to pay down $117m in debt and repurchase up to $20m in units.
Gregory S. Wright, Chief Investment Officer of Digital Realty, stated, “With this transaction, we expect to tactically enhance Digital Core REIT’s portfolio mix, leverage and distribution per unit.” John J. Stewart, CEO of Digital Core REIT Management, added, “This transaction marks our entry into Singapore and strengthens our presence in Japan – a pivotal step in our strategy to expand in the Asia Pacific region.”
The transaction is subject to customary closing conditions, including unitholder approval, and is anticipated to close by the end of the year. This strategic shift aims to position Digital Core REIT for future growth opportunities in the data centre sector.
