Digital Core REIT warns of lower DPU following US bankruptcy filing of 2nd-largest tenant

Cyxtera represents 22.4% of the REIT annualised rental revenue.

Digital Core REIT has warned shareholders that its distribution per unit would likely be reduced by approximately US$0.02, following the bankruptcy filing of its second largest tenant, Cyxtera.

Apart from lower DPU, the REIT said its total asset value and net asset value will also be reduced by 6% ($85m) and 9% (from $0.81 to $0.74), respectively,  if 100% of the annual revenue from Cyxtera is eliminated.

Cyxtera represents 22.4% or $16.3m of the REIT’s annualised rental revenue. It currently occupies 100% of three shell & core facilities in Silicon Valley; 100% of two shell & core facilities in Los Angeles; and 1.5 megawatts, or 4%, of a fully-fitted facility in Frankfurt.

Cyxtera filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey on 4 June.

“The customer has remained current on its rental obligations to Digital Core REIT through May but has not yet paid rent for June. In conjunction with its bankruptcy filing on 4 June 2023, the customer announced that it has obtained a commitment for up to $200 million of debtor-in-possession financing and stated that it intends to pay vendors and suppliers in full for goods and services provided on or after the filing date,” the REIT’s manager said in a bourse filing.