Digital Core Reit plans to fund its expansion into Singapore and Osaka by divesting mature North American assets worth US$315.9 million.
Singapore, Singapore Aug 12, 2026 ALN: [SINGAPORE] Digital Core Reit is proposing a major portfolio revamp to set up a maiden presence in Singapore and deepen its foothold in Japan, funded by the divestment of mature North American assets. This strategic move reflects the growing importance of the Asia-Pacific region in the global data center market, as demand for digital infrastructure continues to rise amid increasing reliance on cloud services and data management.
The pure-play data centre real estate investment trust (Reit) on Wednesday (Aug 12) announced a series of agreements to divest partial interests in three North American properties to its sponsor, Digital Realty, for proceeds of about US$315.9 million. This divestment is part of a broader capital recycling initiative aimed at reallocating resources to regions that exhibit higher growth potential, particularly in the context of the rapidly evolving technology landscape.
The capital recycling initiative will see the proceeds redeployed into Asia-Pacific, alongside debt repayment and unit buybacks. This strategy not only aims to enhance the Reit's asset portfolio but also to improve its financial stability and shareholder value. By shifting focus to Asia, Digital Core Reit is positioning itself to capitalize on the increasing demand for data centre services in emerging markets.
The proposed portfolio overhaul comprises two primary legs negotiated on a willing-buyer, willing-seller basis. For the North American divestments, the Reit will sell a 90 per cent interest in the fully-fitted 371 Gough Road facility in Toronto for C$180 million (US$126.9 million). This facility, known for its modern infrastructure, has been a significant asset in the Reit's portfolio, but the decision to divest reflects a strategic pivot towards more lucrative markets.
In Los Angeles, it will divest a 90 per cent interest in the 200 North Nash Street co-location facility for US$78.6 million. Co-location facilities are essential for businesses that require secure and reliable data storage and management solutions, and this sale indicates a recalibration of the Reit's focus towards regions with higher growth trajectories.
Additionally, it will sell a 39 per cent interest in 8217 Linton Hall Road in Northern Virginia for US$110.4 million. Digital Core Reit will retain a 51 per cent controlling stake in this Virginia property, which recently secured a new 10-year lease with a global cloud service provider. This retention of a controlling interest suggests a strategic decision to maintain exposure to a high-demand market while simultaneously unlocking capital for reinvestment.
On the acquisition front in the Asia-Pacific, the Reit will make its Singapore entry by acquiring a 2.5 per cent interest in Digital Loyang 2 (11 Loyang Close) for S$87.4 million. This five-storey facility operates in one of the most supply-constrained data centre markets globally, it said. Singapore has emerged as a critical hub for data centres due to its strategic location, robust infrastructure, and favorable regulatory environment, making it an attractive target for investment.
Furthermore, the Reit will expand in Osaka by acquiring an additional 25 per cent interest in the freehold Osaka Data Centre (Digital Osaka 3) for 17.6 billion yen (US$108.5 million), raising its total ownership stake from 20 to 45 per cent. The Osaka market has witnessed significant growth in data centre demand, driven by the increasing need for cloud services and digital storage solutions.
The US$176 million redeployment into Asia marks a geographic shift for Digital Core Reit. Upon completion, its concentration in the Asia-Pacific region will double from 11 to 22 per cent of its assets under management (AUM), while its North American exposure will decrease from 65 to 52 per cent. This strategic reallocation reflects a broader trend among real estate investment trusts to diversify their portfolios and mitigate risks associated with market fluctuations.
Osaka will also emerge as the Reit’s third-largest market, accounting for 18 per cent of its AUM. This increased focus on Asia is indicative of the region's burgeoning data economy, which is expected to continue expanding as businesses increasingly shift towards digital operations.
“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,” said John Stewart, CEO of the Reit’s manager. His comments underline the significance of this strategic move, which aims to enhance the Reit’s competitive positioning in a rapidly evolving market landscape.
He added that the multi-faceted transaction allows unitholders to “participate in near-term embedded growth from stabilised investments while reducing near-term CapEx funding requirements yet preserving the ability to participate in long-term development potential” by keeping a majority stake in the Northern Virginia asset. This approach reflects a balanced strategy that seeks to optimize immediate returns while also laying the groundwork for future growth.
The transaction is expected to generate net proceeds of about US$140 million. The manager intends to utilise these funds to fortify the balance sheet by allocating US$117.4 million to repay Euro- and US dollar-denominated debt. This proactive debt management is crucial for maintaining financial health and ensuring liquidity in a competitive market.
Furthermore, up to US$20 million will be used to repurchase units on the open market, capitalising on current valuations, while US$2.5 million is earmarked for estimated professional and transaction fees. The unit buyback program is intended to enhance shareholder value by reducing the number of outstanding units, which can lead to an increase in earnings per unit.
Gregory Wright, chief investment officer of Digital Realty, noted that the tactical enhancements to the portfolio mix and leverage are designed to better position the Reit for the ongoing investment cycle in the data centre sector. This sentiment reflects the confidence in the data centre market's resilience and growth potential, particularly in light of increasing digitalization across various industries.
The proposed transactions constitute “interested person transactions” and are subject to unitholder approval at an upcoming extraordinary general meeting. Management added that it expects the deal to close before the end of the year. This approval process is standard practice in the industry to ensure transparency and alignment with unitholder interests.
Units of Digital Core Reit closed flat at US$0.475 on Tuesday, before it called for a trading halt. The trading halt indicates a period of uncertainty or significant corporate action, and it is likely that market participants will closely monitor the outcome of the proposed transactions and their implications for the Reit's future performance.
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