![\"Digital](\"https:\/\/www.europesays.com\/japan\/wp-content\/uploads\/2026\/08\/Digital-Realty-SIN12-data-center-1.jpg\")
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Digital Core REIT is gaining a slice of Digital Realty\u2019s Loyang Close asset (Image: Digital Realty)<\/p>\n
After watching its unit price slide by nearly 8 percent over the past year, Singapore-listed data centre trust Digital Core REIT received a boost today from a deal to trade most of its North American portfolio back to its sponsor in return for partial ownership of a data centre in its home city and an enlarged stake in an Osaka facility.<\/p>\n
Digital Core REIT will sell three North American data centres to a unit of sponsor Digital Realty for combined proceeds of about $316 million, according to an announcement to the SGX today, with the manager planning to deploy that cash, along with freshly raised debt to acquire 2.5 percent of 11 Loyang Close in Singapore and an addition 25 percent of Digital Osaka 3 from other Digital Realty units, for about $176 million.<\/p>\n
\u201cWe really think it checks a lot of boxes in terms of what investors are looking for,\u201d chief executive John Stewart said, pointing to the deal\u2019s establishment of a foothold in Singapore, which he called \u201ca very highly sought-after data center market.\u201d<\/p>\n
Digital Core REIT\u2019s manager, a unit of Digital Realty, announced the portfolio rejig as the decline in the trust\u2019s unit price has outpaced SGX-listed peers Keppel DC REIT and NTT DC REIT on the exchange this year. Digital Core REIT units gained 5.26 percent today, the biggest increase since a 6.9 percent jump on 5 January.\u00a0<\/p>\n
Swapping North America for Asia<\/p>\n
As it boosts its Asia footprint, Digital Core REIT is selling its 371 Gough Road property in Toronto and 200 North Nash in Los Angeles to its sponsor, Digital Realty, along with a 39 percent stake in its 8217 Linton Hall asset in Virginia. The REIT had originally purchased all three properties from Digital Realty.<\/p>\n
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![\"Digital](\"https:\/\/www.europesays.com\/japan\/wp-content\/uploads\/2026\/08\/John-Stewart-digital-core-reit-e1709819581648.jpeg\")
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Digital Core REIT CEO John Stewart<\/p>\n
Digital Core REIT will use the combined proceeds from the three North American divestments, plus roughly $176 million of newly raised Singapore dollar and Japanese yen debt, to fund the two Asia acquisitions, with Digital Realty acting as the seller in these transactions. Part of the proceeds will also be used to pay down existing borrowings, according to the trust\u2019s filing with the Singapore Exchange.<\/p>\n
The Osaka purchase will cost the REIT about $108.5 million and bring its interest in the asset to 45 percent, while the deal includes about $67.6 million for the Singapore investment, the filing showed. Digital Core REIT will also spend up to $20 million on unit buybacks, while directing $117.4 million toward repaying existing US dollar- and euro-denominated debt that carries interest costs of about 4.4 percent. The new Singapore dollar and yen borrowings cost roughly 3 percent, chief financial officer Dave Kraft said Wednesday.<\/p>\n
The deal will lower the trust\u2019s pro forma aggregate leverage to 36.3 percent from 39.2 percent as of 30 June, even after accounting for the buybacks, the filing showed. Distributions per unit would rise to 4.16 US cents on a pro forma basis from 3.60 US cents currently, according to the filing \u2014 a figure that already reflects a lease-up at the trust\u2019s Linton Hall, Virginia facility disclosed in January.<\/p>\n
\u201cWe\u2019re selling at a cap rate that\u2019s approximately equal to the cap rate that we are investing in,\u201d Kraft said, noting that the assets being divested are roughly 25 years old against five years for the Singapore and Osaka properties.\u00a0<\/p>\n
The manager pointed to lower borrowing costs and the potential to boost distributions as key benefits of the deal.\u00a0<\/p>\n
In a press briefing Kraft noted that, \u201cThe accretion of 4 percent that\u2019s driven by the opportunity here to pay down debt and to swap some debt from 4.4 percent interest rate in US dollars and euros and borrow in yen and Singapore dollars at 3 percent. That differential in interest rate drives 3 percent accretion, and we\u2019re buying back up to $20 million of stock, which takes that 3 percent all the way up to 4 percent.\u201d<\/p>\n
Aiming to Re-Rate<\/p>\n
The $20 million of divestment proceeds which will go to finance a fresh round of unit buybacks, follow around $30 million in units repurchased since late 2022, according to the presentation.<\/p>\n
According to Mingtiandi calculations, Digital Core REIT\u2019s units carry a discount to net asset value of almost 40 percent, based on the REIT\u2019s most recently disclosed NAV per unit \u2014 a gap which Stewart said rules out issuing new equity for now.\u00a0<\/p>\n
\u201cIf we were to go issue equity today, we\u2019re trading at a huge discount to NAV,\u201d he said. \u201cThat would be massively dilutive.\u201d For now, buybacks remain the primary tool the manager has to close that gap.<\/p>\n
In response to an inquiry from Mingtiandi as to whether the transaction was intended to help remedy the REIT\u2019s price slump, Stewart posed this week\u2019s deal as a way to win back investor confidence.\u00a0<\/p>\n
\u201cThat\u2019s absolutely the hope,\u201d Stewart said.\u00a0 \u201cWe aim to turn things around and re-rate, put us in a position where we can kind of go on offense. That\u2019s what this is intended to be \u2014 certainly a big step in that direction.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Digital Core REIT is gaining a slice of Digital Realty\u2019s Loyang Close asset (Image: Digital Realty) After watching…\n","protected":false},"author":2,"featured_media":72900,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[11063,19349,46707,46898,474,8,85,46899],"class_list":["post-72899","post","type-post","status-publish","format-standard","has-post-thumbnail","category-osaka","tag-daily-sp","tag-data-centres","tag-digital-core-reit","tag-digital-realty","tag-featured","tag-japan","tag-osaka","tag-s-reit"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/72899","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=72899"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/72899\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/72900"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=72899"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=72899"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=72899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}