Digital Core REIT (DCRU) Q2 2024 earnings summary

Executive summary

• 1H24 distribution per unit of 1.80 US cents, up 1.1% vs. 2H23, with 0.48 US cents paid as advance and 1.32 US cents to be paid in September 2024; 14.6 million units repurchased, delivering 1.0% DPU accretion.

• Completed accretive acquisitions: 24.9% more in Frankfurt and 10% more in Osaka, expanding portfolio and income base.

• Portfolio comprises 10 high-quality data centers across the US, Canada, Germany, and Japan, with $1.4bn AUM and 97% occupancy as of 30 June 2024.

• Artificial intelligence and digital economy trends expected to drive continued growth in digital spending.

• Repurchased 14.6 million units at $0.57, supporting DPU accretion; units were cancelled.

Financial highlights

• 1H24 revenue of $48.3m, down 9.6% year-over-year due to the sale of two Silicon Valley properties.

• Net property income fell 13.4% to $30.4m; same-store cash NPI rose 1.3%.

• Distributable income rose 5.1% year-over-year to $22.6m; DPU decreased 6.3% to 1.80 US cents due to a higher unit base.

• Net profit attributable to unitholders more than doubled to $18.6m, aided by higher other income and lower expenses.

• Net asset value per unit at $0.68, down 1.4% from end-2023; unit price at $0.570, down 11.6% from end-2023.

Outlook and guidance

• AI and digital economy expected to support ongoing demand for data centers.

• No debt maturities until December 2025, with $303m of available facilities and $134m debt headroom at 40% leverage.

• Sponsor's $15bn global acquisition pipeline and ROFR mandate provide external growth opportunities.

• Manager intends to preserve balance sheet flexibility and prudently use debt headroom for accretive investments.

• Global economic growth is projected to remain steady but below pre-pandemic averages; higher-for-longer interest rates pose risks.