In its business update for the three months to end-March, Digital Core REIT’s 1QFY2026, the REIT manager announced distributable income of US$11.7 million, unchanged y-o-y, on a marginal decline in revenue to US$44.132 million. Net property income fell 4.9% y-o-y to US$20.84 million.
Occupancy was stable at 97%. However, aggregate leverage fell to 39% as at end-March, higher than the 37.1% as at end-Dec 2026.
The higher aggregate leverage was due to drawdowns for working capital, capex for the asset enhancement initiatives for Linton Hall, Virginia, and for share buybacks. John Stewart, CEO of Digital Core REIT’s manager says the total capex for Linton Hall is around US$40 million to US$50 million. "We are on track," he said. On share buybacks, Stewart said “when the war started we were dipping below 50 US cents and we saw an opportunity to take down a small amount. We are big believers in repurchasing our units. But we won’t be active in the medium term. But when our criteria are met we will continue to buy back units over time.”
The debt increase during the quarter was US$39 million. More than half of that was for working capital. US$15 million to US$20 million was for capex and share buybacks.
Stewart says 87% of utilities costs are passed through. For colocation properties in Los Angeles, the REIT is responsible for utilities, but prices have been locked in for 2-3 years. “Customer contracts give us the right to reprice if costs rise by more than 5%,” Stewart adds.
In the longer term, DC REIT aims to double assets and market capitalisation. Over time, Stewart reveals that the medium term plan is to recycle assets in North America to Asia-Pac. "A big part of our challenge is liquidity and its our assessment we need to double the size and scale of platform to be relevant. We have the acquisition pipeline from our sponsor to support the growth. We will need equity capital to fund expansion. It’s not an immediate term objective,” Stewart says. He adds that Linton Hall's new tenants will move in in December, and FY2027's distributions per unit are likely to increase by double-digits as a result.
