DigiCo Infrastructure REIT (ASX: DGT) shares are soaring on Wednesday.
At the time of writing, the ASX data centre stock is up 23% to $2.90.
Despite today's rally, it is worth noting that DigiCo Infrastructure REIT shares remain well below their December 2024 IPO listing price of $5.00 per share.
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Why is this ASX data centre stock rocketing today?
Investors are bidding the DigiCo's shares higher after it announced the sale of its Chicago data centre asset and a major strengthening of its balance sheet.
According to the release, the company has entered into a binding agreement to sell its CHI1 facility in Chicago for US$750 million. This represents a roughly 5% premium to its November 2024 purchase price.
The sale is expected to complete in the first quarter of FY 2027.
Balance sheet boost
A key reason that investors appear pleased with the update is the impact the sale will have on DigiCo's balance sheet.
The company expects the CHI1 sale to release net cash proceeds of approximately $360 million after repayment of asset-level debt.
Pro forma net debt is expected to fall from $1.5 billion at 31 December 2025 to approximately $0.5 billion, while gearing is expected to drop from 36% to 17%. At the same time, available liquidity is expected to increase to approximately $900 million.
This materially improves DigiCo's financial position and gives it more flexibility to fund growth.
Focus turns to SYD1
Management intends to redeploy capital into the SYD1 development in Sydney, which it describes as its most compelling growth opportunity.
The company confirmed that practical completion has been achieved for the first 15MW of a 20MW upgrade, with the remaining 5MW on track for delivery before 30 June.
DigiCo also noted that the broader 88MW SYD1 development program remains supported by strong customer demand.
The ASX data centre stock's interim CEO, Chris Maher, commented:
The release of capital from CHI1 provides additional financial flexibility and capacity to accelerate the delivery of the SYD1 development program. The 88MW project has progressed further, with design and tender documentation for the expansion continuing to advance, the 70% design milestone now achieved and a head contractor to be appointed in Q3 CY2026. The remaining capacity is planned to be delivered progressively over the next three years, with 10MW of capacity targeting delivery in Q2 CY2027. The demand pipeline for the remaining capacity is strong and expected to generate attractive returns.
Capital management and outlook
DigiCo also revealed that it intends to explore capital management initiatives, including potentially returning excess capital through enhanced distributions in the short term.
Another positive is that management has reaffirmed its FY 2026 underlying EBITDA guidance of $125 million.
It also expects the US asset sales to be materially funds from operations accretive from FY 2027, while the SYD1 expansion is expected to support strong EBITDA growth over the next four years.
