Digital Core Reit proposes private placement to raise US$100 million

THE manager of Digital Core Real Estate Investment Trust (Digital Core Reit) has proposed a private placement to raise gross proceeds of no less than US$100 million.

The issue price ranges between US$0.60 and US$0.625 per new unit, said the manager on Wednesday (Feb 7).

The price range represents a discount of between about 8.8 per cent and 5 per cent to the volume weighted average price of US$0.6579 per unit on the preceding market day.

The manager said that the issue price will be determined after a book-building process, and it will update on the number of new units as well as the price once they are determined.

About 75 per cent of the gross proceeds raised will be used to fund potential acquisitions, which may include acquiring an interest in a data centre located in Japan, said the manager.

The future acquisitions may also include a further acquisition of 4.9 per cent interest in a facility in Frankfurt. This would be bring the total interest to be acquired by the Reit to 24.9 per cent. This is on top of the proposed acquisition of 20 per cent stake in the facility announced last November.

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“The proposed acquisitions will enhance the scale and diversification of Digital Core Reit’s portfolio, including further improving geographic and customer diversification while enhancing overall credit quality and cash flows,” said the manager.

“Both acquisitions are pending final negotiations and signing of the sale and purchase agreements.” The manager added that the acquisition of Frankfurt facility is also subject to unitholders’ approval.

The pro forma distribution per unit (DPU) for FY2023 would stand at US$0.0356.

This is after adjusting the transactions announced last November, including the asset divestments and the proposed acquisition of a 20 per cent stake in the Frankfurt facility, as well as assuming the Reit has had completed the proposed acquisitions and private placement on Jan 1, 2023.

It represents a 1.8 per cent DPU accretion as compared to pro forma DPU after adjusting for the transactions solely.

Some US$22.5 million of the gross proceeds raised is planned to be used for debt repayment, and some US$2.5 million would be used to pay the estimated fees and expenses.

Pro forma aggregated leverage as at the end of December, after the US$160 million asset divestments, as well as the private placement, would be lowered to 33.8 per cent, from 40.5 per cent reported.

The manager also requested a trading halt before market open on Wednesday.

Units of Digital Core Reit : DCRU 0% closed flat at US$0.665 on Tuesday.