Digital Core REIT's 1HFY2024 DPU declines by 6.3% to 1.8 US cents

The Edge Singapore
2-min read

Digital Core REIT's DPU falls 6.3% y-o-y due to larger unit base but rises h-o-h by 2 US cents to 1.8 US cents in 1HFY2024

Digital Core REIT declared a distribution per unit of 1.80 U.S. cents for the six months ended June 30, its 1HFY2024. Of this, an advanced distribution per unit of 0.48 U.S. cents for the period from Jan 1 to Feb 19 was paid on April 4. However, h-o-h, distributions per unit (DPU) rose by 2 US cents, indicating that operations have stabilised following the resolution of a customer bankrupty last year. The distribution for the period from 20 February 2024 to 30 June 2024 will be paid on Friday, Sept 20.

Although distributable income rose to US$22.58 million in 1HFY2024, up 5.1% y-o-y, distributions per unit fell by 6.3% y-o-y to 1.8 US cents as the number of units in issue rose by 14% following a placement of 192 million new units in February.

In March 2024, Digital Core REIT completed the acquisition of an incremental 10% interest in an Osaka data centre from Mitsubishi Corporation for ¥7.725 billion, or approximately US$51.5 million at a 1% discount to appraised value. In April 2024, Digital Core REIT completed the acquisition of an incremental 24.9% interest in its Frankfurt Facility from Digital Realty for €117.0 million, or approximately US$128.7 million, at a 6% discount to appraised value. Both transactions enhanced Digital Core REIT’s portfolio quality and improved geographic diversification as well as customer credit quality.

As at end-June, 30 June 2024, Digital Core REIT had US$472 million of total debt outstanding consisting of US$454 million of unsecured term loans due 2025-2027 and US$18 million outstanding on its unsecured revolving credit facility. Aggregate leverage was 34.4% as at June 30. The weighted average cost of debt was approximately 4.1% and the weighted average debt maturity was approximately 2.4 years. Approximately 93% of total interest rate exposure was hedged. The trailing 12-month interest coverage ratio was 3x, but in 2Q2024, the ICR was 4.2x.

Separately, the Monetary Authority of Singapore has announced that, in a consultation paper, it is proposing a minimum ICR for all REITs to be set at 1.5x. The aggregate leverage limit stays at 50%. DC REIT is well within these proposed limits for both ICR and aggregate leverage.

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