Digital Core REIT to sell three North American data centres

The company will redeploy funds towards its Singapore and Japan assets.

Singapore-listed Digital Core REIT has announced an agreement to sell its interests in three North American data centres to its sponsor, Digital Realty, and reallocate the funds towards assets in Singapore and Japan, debt repayment and unit buybacks.

The restructuring is expected to increase Digital Core REIT’s distribution per unit by 4.1% and lower its debt ratio to 36.3% from 39.2%.

Under the agreement, the real estate investment trust will sell its 90% interest in 371 Gough in Toronto for C$180m (US$127m), its 90% interest in 200 N. Nash in Los Angeles for $102.6m (US$79m), and a 39% stake in 8217 Linton Hall in Northern Virginia for $142.9m (US$110m). It will retain a 51% majority stake in the Northern Virginia property.

Gross proceeds from the North American sales will amount to about $410.4m (US$316m).

From these earnings, Digital Core REIT will spend roughly $228.6m (US$176m) to acquire a 2.5% stake in 11 Loyang Close in Singapore for $87m (US$68m) and raise its ownership in Digital Osaka 3 in Japan to 45% for ¥17.6b (US$108m) from 20%.

The transactions will yield net proceeds of around $181.8m (US$140m). The trust intends to use roughly $152.0m (US$117m) to pay down debt and allocate up to $26.0m (US$20m) for open-market unit repurchases.

The deal is subject to unitholder approval and standard closing conditions, with completion anticipated before the end of the year.

($1.00 = US$0.78)

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