Despite entering the Australian Real Estate Index (AREIT) last Friday in 12th spot by market cap ($2.6 billion), putting it well inside the ASX200 stock (174) – which means some funds need to buy it regardless - the DigiCo Infrastructure REIT (ASX: DGT) has failed to capture the market’s imagination.
Clearly spooked by the immediate market selloff, which saw the $5.00 issue price hit an intraday day low of $4.02 on Monday, DigiCo’s manager, HMC Capital (ASX: HMC) did it’s best to reassure traders - through a note to the ASX this morning - on what was billed as a marquee float.
While HMC Capital has brought nothing new to the table, it has reassured investors that nothing has changed in the underlying business, here’s what we know so far:
- DigiCo expects to deliver a pro forma annualised FY25 adjusted earnings of $97 million.
- The REIT raised $1.9 billion pursuant to the offer under its replacement prospectus.
- Proceeds will be used to fund the initial portfolio and develop the greenfield sites within it.
The REIT was also quick to highlight structural tailwinds underscoring this asset class, notably growth in data creation and consumption, growing reliance on the cloud and the adoption of next-gen technologies like AI.
For those playing along at home, DigiCo owns and operates 13 tier one and tier two locations across Australia’s East Coast, Adelaide and in the U.S. for which it paid $3.9 billion.
Curiously, the REIT chose its first day of trading to announce regulatory approval for its $1.93 billion acquisition of the Global Switch property in Sydney’s CBD. To highlight the significance of this acquisition, Global Switch is expected to contribute 72.5% of the REIT’s forecasted revenue between now and the end of financial year.
While the REIT has managed to pull back some initial losses, up around 1% today to $4.65, the market could be left wondering if the data centres – a recent holy grail for REITs – might be starting to unravel. Retail investors who like to ride the coattails of institutional buyers appear to have remained on the sidelines for now.
Some of the negative sentiment being vented on DigiCo may relate to any overhang from the recent listing of Healthcare and Wellness REIT (ASX: HCW) which listed at $2, only to tank to $1.03 following a dilutive rights issue. But while sellers clearly outweighed buyers on day one, Commsec data at the end of today’s trading a suggests they’re close to even.
Given that DigiCo is one of three ballsy IPOs to underwhelm in recent weeks, the market may put down poor trading to early teething that will self-correct over time.