Azzet reports on three A-REITs with market-moving updates to share today.
DigiCo jumps after receiving government certification
Shares in DigiCo Infrastructure REIT (ASX: DGT) were up around 9% at the open after the A-REIT told the market its Sydney data centre, SYD1, has been awarded “certified strategic” status by the Australian Department of Home Affairs.
This is the highest level of certification under the federal government's hosting certification framework (HCF) and allows the site to lease to government agencies and enterprises that supply government services.
The certification means DigiCo, which focuses on digital infrastructure assets, can securely host sensitive [federal] government data and whole-of-government systems classified as “protected” at its SYD1.
It’s understood that key customers — including government tenants, key hyperscalers, and any enterprise that hosts government workloads — could not contemplate leasing at the SYD1 facility until it received HCF status.
If you’re new to the term Hyperscale, it simply refers to AI massive data centres that are designed to handle the immense computational demands of artificial intelligence workloads.
Since acquiring SYD1 in December last year, which is located adjacent to Sydney’s central business district, DigiCo has invested heavily in security and infrastructure upgrades necessary to meet the highest Australian Government standards.
Commenting on today’s update, the company believes this significant milestone underscores DigiCo's commitment to national digital sovereignty and reinforces the A-REITs’ role and the SYD1 site as a cornerstone of Australia's critical digital infrastructure.
As a diversified owner, operator and developer of data centres, DigiCo’s portfolio consists of 13 data centres across key Australian and North American markets with 238MW of planned IT capacity, including 76MW of installed IT capacity and a 162MW development pipeline.
In total, the company’s portfolio has an aggregate portfolio asset value of just under $4 billion, a contracted IT capacity of 67 megawatts (MW) and a contracted utilisation of 88% of currently installed capacity.
Since listing in December 2024 in a $2 billion initial public offering (IPO) – the biggest of 2024 – at an offer price of $5.00, DigiCo [externally managed by ASX-listed HMC Capital Limited, or HMC], has struggled as a listed entity.
Today’s market update is welcome relief for shareholders who have watched the share price shed 31% of its value since listing.
Further details will be provided at DigiCo’s annual results briefing on 18 August.
Look out for more detail on how DigiCo plans to return to market and begin working on contracts with new customers.
Broker Morgans recently described DigiCo’s main value-add asset (SYD1) as a “high-quality property with significant expansion potential – which could easily double its deployable capacity by 2030.
Expansion/development potential is the main likely source of future outperformance.
DigiCo has a market cap of $1.9 billion; the share price is down 29%in the last month and up 15% in the last month.
Charter Hall Social bounces on strong financial turnaround
Shares in Charter Hall Social Infrastructure REIT (ASX: CQE) were up around 5.5% at the open after the A-REIT - which primarily invests in properties that support essential community services - announced a noteworthy return to profitability for FY25.
The A-REIT reported a statutory profit of $71 million, which marks a major turnaround from the $19.6 million loss recorded last year.
Despite a slight fall in operating earnings, the A-REIT declared distributions totalling $56.6 million, equating to 15.2 cents per unit.
Commenting on today’s update, Charter Hall Social Infrastructure REIT’s fund manager, Travis Butcher, told investors that the key focus over the past year has been to position the fund for sustainable income and distribution growth.
“The Fund is in a strong position with an 11.6 year WALE, 100% occupancy and a robust capital position with a weighted average debt maturity of 4.9 years following the successful debt refinancing,” said Butcher.
“We expect that there will continue to be significant growth opportunities in social infrastructure assets, driven by favourable demographic trends and the essential nature of the industry, including government backing."
The financial results were influenced by various non-cash and one-off items, including net fair value movements on investment properties and changes in derivatives.
The A-REIT also maintained a stable net tangible asset backing per unit, indicating strong asset management and financial health.
Supported by strategic acquisitions and divestments, portfolio value increased to $2.1 billion.
The A-REIT reported 100% occupancy across its portfolio, with a weighted average lease expiry of 11.6 years.
Acquisitions totalled $144.1 million – at an average initial yield of 6.7% - while divestments amounted to $151.1 million.
In July, the A-REIT successfully refinanced $900 million of debt and extended its average debt maturity to 4.9 years.
The company continues to focus on high-quality social infrastructure assets with long-term leases and strong tenant covenants.
NTA of $3.86 per unit increased from 1.0% from 30 June 2024.
As at 30 June 2025, balance sheet gearing of 30.5% is at the lower end of the target 30 – 40% range and look-through gearing is 31.3%.
Charter Hall Social Infrastructure REIT has a market cap of $1.2 billion; the share price is up 26% over one year and up 11% over one month.
While the stock’s 200-day moving average is trending upwards and highlights long-term investor interest in the stock, the 20-day moving average is falling as upwards momentum wanes.
Consensus is Strong Buy.
Dexus Convenience Retail REIT moves higher after profit turnaround
Shares in Dexus Convenience Retail REIT (ASX: DXC) were up around 1.7% at noon after the A-REIT - which owns Australian service stations and convenience retail assets - posted a FY25 net profit after tax of $39.4 million.
Significantly up on the $3.4 million from the previous year, much of the major turnaround in profit is being attributed to property valuation gains recorded this year, compared to valuation losses recorded last year.
Funds From Operations (FFO) and distributions of 20.7 cents per security, were slightly above guidance of 20.6 cents per security.
Commenting on today’s update, Jason Weate, DXC Fund Manager, told the market that the A-REIT’s portfolio continues to generate defensive income with embedded rental growth, while a strengthened our balance sheet, through strategic divestments, creates the capacity to redeploy capital into higher-returning opportunities.
“Today’s result demonstrates our ability to deliver on our investment proposition to generate secure and defensive income with embedded growth, supported by prudent capital and active portfolio management,” said Weate.
“We remain focused on redeploying capital into higher returning initiatives, including the Glass House Mountains redevelopment.”
During the year, DXC strategically divested $38.8 million of our portfolio at an average 1.8% discount to book value.
FY25 also saw the continued strength of the fuel and convenience transaction market, underpinned by robust demand for secure income assets amid an increasingly favourable interest rate environment.
Other key FY25 numbers announced today:
- Balance sheet positioned for growth with gearing of 29.4%.
- Glass House Mountains Northbound site on track for completion in February 2026.
- FFO was $28.4 million, or 20.7 cents per security, reflecting a decline of 1.5% on the prior year.
- Like-for-like net operating income growth of 2.9%.
- The June 2025 reporting period represents the first instance of capitalisation rate compression since 2022.
- The asset revaluations drove an eight cent, or 2.2% increase, in NTA to $3.64 per security.
- Average debt maturity lengthens to 4.5 years with no debt expiries until FY28.
- Hedged debt averaged 72% for FY25.
During the year, 98% of the A-REIT’s investment properties, by value, were independently externally valued, resulting in a net revaluation uplift of $16.6 million, a 2.3% increase on prior-year book values, driven by a combination of contracted rent growth and capitalisation rate compression of eight basis points.
Portfolio occupancy increased to 99.9% following the lease-up of minor specialty vacancies, with 95% of overall income derived from major national and international tenants.
Despite the observed recovery in transaction market volumes and pricing, the A-REIT continues to trade at a circa 19% discount to NTA.
The A-REIT provided FY26 guidance for FFO and distributions of 20.9 cents per security, reflecting a distribution yield of 7.1%.
Back in June Bell Potter had a Buy rating on the A-REIT and $3.35 price target on its shares.
The A-REIT’s shares were trading at $3.02 this morning.
Dexus Convenience’s market cap is $416 million; the share price is up 8% in one year and up 2% year to date.
The stock appears unable to make a substantial move up or down. Its 20 and 200-day moving averages are relatively flat and imply a lack of interest by both buyers and sellers.
Consensus is Moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
