Digico Infrastructure REIT: A High-Stakes Play on AI-Driven Data Center Growth

Here's the deal: Digico Infrastructure REIT (ASX:DGT) is positioning itself as a critical player in the AI infrastructure boom, and its FY26 earnings forecast tells a story of aggressive growth, operational heft, and a calculated balance sheet strategy. Let's break it down.

Earnings Forecast: A Springboard for Expansion

DigiCo's projected FY26 underlying EBITDA of AUD 120-125 million, according to a Kalkine article, isn't just a number-it's a signal of the company's ability to monetize its expanding data center footprint. This forecast hinges on new customer agreements and the SYD1 expansion in Sydney, which is being reconfigured to meet surging demand for high-density AI infrastructure, according to the company statistics. By mid-2026, the company expects to deliver 41MW of contracted IT capacity in Australia alone, surpassing its previous run-rate targets, as reported in a Reuters report.

But here's the kicker: This EBITDA growth isn't just about scale-it's about timing. The new contracts will phase in during the second half of FY26, creating a "step-up" effect in revenue visibility. For investors, this means the REIT is laying the groundwork for a compounding earnings trajectory, assuming demand for AI infrastructure remains robust.

Operational Scalability: The SYD1 Play

The SYD1 project is the linchpin of DigiCo's scalability thesis. Originally designed for 9MW, the facility is now being expanded to accommodate 41MW of capacity by 2026, according to the company statistics. This isn't just a numbers game-it's a strategic pivot to capture market share in a sector where proximity to end-users (e.g., Sydney's tech ecosystem) and power availability are critical.

What's more, the company has 120MVA of allocated power for SYD1, ensuring it can meet the energy demands of high-density AI workloads, as shown in the company statistics. This is a big deal. As AI models grow in complexity, power availability becomes a bottleneck for competitors. DigiCo's proactive approach to securing power infrastructure gives it a first-mover advantage.

Capital Allocation: Balancing Growth and Debt

Now, let's talk about the elephant in the room: DigiCo's Debt/EBITDA ratio of 19.46, per the company statistics. That's a heavy load for any REIT, but the company is managing it with a mix of existing cash reserves and undrawn debt facilities. The FY26 growth capex of AUD 160-180 million, noted in the Kalkine article, is being funded entirely by these sources, avoiding a dilutive equity raise.

But here's the rub: High leverage means DigiCo's margin of safety is thin. A misstep in tenant retention or a delay in SYD1's expansion could strain its 90-100% FFO payout ratio, as discussed in the Kalkine article. However, the REIT's 12c per security distribution for FY26 reported in the Reuters piece suggests management is confident in its ability to service debt while rewarding shareholders-a tightrope walk, but one that could pay off if the AI infrastructure tailwind continues.

The Long Game: From MW to Market Leadership

DigiCo's long-term value proposition hinges on its ability to scale beyond SYD1. By 2027, the company plans further capacity additions at the same facility, according to the company statistics, and its 85MW global billed IT capacity target (44MW in North America, 41MW in Australia) positions it as a cross-continental player. This diversification is key. If Australia's AI adoption slows, North America's demand could offset it.

Verdict: A High-Volatility, High-Reward Bet

DigiCo Infrastructure REIT is a classic Cramer-style "all-in" play. It's betting big on AI infrastructure, a sector with explosive growth potential but also regulatory and demand risks. For the aggressive investor, the REIT's FY26 forecast and SYD1 expansion offer a compelling case for long-term value creation. But for the risk-averse, the debt load and reliance on a single expansion project could be a red flag.

Bottom line: If you're comfortable with volatility and believe in the AI revolution, DGT could be a gem. Just make sure you're not all-in-keep a seatbelt handy.