Digital Core REIT (DCRU) H1 2024 earnings summary

Executive summary

• Declared a 1H24 distribution per unit of 1.80 US cents, up 1.1% vs. 2H23, with 0.48 US cents paid as an advanced distribution in April 2024 and 14.6 million units repurchased, delivering 1.0% DPU accretion.

• Completed acquisition of additional 24.9% interest in Frankfurt facility for $128.7 million and 10% in Osaka facility for $51.5 million, both at discounts to appraised value, expanding portfolio and income base.

• Completed sale of two Silicon Valley facilities for $160.2 million in January 2024, redeploying proceeds into new acquisitions and partial debt repayment.

• Raised $120 million via private placement in February 2024, issuing 192 million new units at $0.625 per unit.

• Portfolio comprises 10 high-quality data centers across the US, Canada, Germany, and Japan, with $1.4bn AUM and 97% occupancy as of 30 June 2024.

Financial highlights

• 1H24 revenue of $48.3 million, down 9.6% year-over-year due to property divestments; net property income fell 13.4% to $30.4 million.

• Distributable income to unitholders rose 5.1% year-over-year to $22.6 million; DPU decreased 6.3% to 1.80 US cents.

• Net profit attributable to unitholders more than doubled to $18.6 million from $9.1 million in 1H23, aided by higher other income and lower expenses.

• Basic earnings per unit rose to 1.43 US cents from 0.81 US cents year-over-year.

• Annualized distribution yield was 6.35%, down from 8.15% a year ago.

Outlook and guidance

• Data center demand expected to remain robust, driven by AI, cloud adoption, and digital transformation.

• No debt maturities until December 2025, with $303 million of available facilities and $134 million debt headroom at 40% leverage.

• Sponsor's $15 billion global acquisition pipeline and ROFR mandate provide external growth opportunities.

• Manager aims to preserve balance sheet flexibility and pursue accretive investments.

• Global economic growth projected to remain steady but below pre-pandemic averages; higher-for-longer interest rates pose risks.