Australia’s DigiCo Infrastructure REIT is moving to exit parts of its US portfolio, including its Los Angeles land holdings, as it reallocates capital towards expansion in Australia. The company confirmed it has entered into a binding agreement to sell its Chicago (CHI1) data centre for USD 750 million, while also exploring options to monetise its LAX1 and LAX2 sites in California. The move is part of a broader capital recycling strategy aimed at reducing debt and funding growth in its Sydney platform.
Monterey Park withdrawal
DigiCo’s decision to monetise its Los Angeles sites follows earlier challenges in progressing development at the LAX1 location. In April, the company withdrew its application for a proposed data centre in Monterey Park after receiving indications that planning approval was uncertain. “We have voluntarily withdrawn our application for a data centre project at LAX1,” said Chris Maher, interim CEO of DigiCo. “We will work with the City of Monterey Park Council to establish an alternative use for the combined 33 acres of land, with a view to efficiently recycling the capital invested in both sites.”
The LAX1 and LAX2 assets remain on DigiCo’s books at a combined value of around USD 71 million, with the company stating it remains confident it can realise value from the land. The withdrawal reflects broader challenges for data centre development in parts of California, where planning, power availability, and local opposition have increasingly influenced project timelines.
The sale of the CHI1 facility is expected to generate net cash proceeds of approximately AUD 360 million and significantly strengthen DigiCo’s balance sheet. Pro forma net debt is forecast to fall from AUD 1.5 billion to around AUD 0.5 billion, reducing gearing from 36% to 17%, while increasing available liquidity to approximately AUD 0.9 billion.
The company said the improved financial position would provide flexibility to accelerate development of higher-returning assets and support potential capital management initiatives.
Focus shifts to Sydney expansion
DigiCo is redeploying capital towards its SYD1 development in Sydney, which it describes as its most compelling growth opportunity. The project will deliver up to 88MW of capacity, with the first 15MW of a 20MW upgrade already completed and the remaining 5MW expected by mid-2026.
Further expansion is planned over the next three years, with an additional 10MW targeted for delivery in 2027 and remaining capacity to be rolled out progressively. Chris Maher said the company continues to see strong demand for the facility. “The demand pipeline for the remaining capacity is strong and expected to generate attractive returns,” he said.
DigiCo said its Kansas City and Dallas Fort Worth assets continue to deliver stable returns and will remain part of its core portfolio, while US asset sales are expected to be accretive to funds from operations from FY27. The company also signalled it may return excess capital to investors through enhanced distributions as part of its capital management strategy.