These 2 David Di Pilla-Backed ASX REITs Might Just Be Back In Favour With Investors!

HMC Capital (ASX:HMC) and DigiCo Infrastructure REIT (ASX:DGT), two REITs backed by David Di Pilla (he founded the first of these and the first seeded and manages the second), have spent the better part of the past year wrestling with investor scepticism. Don’t just take our word for it both are down over 50% since the first half of 2025.

Both names were weighed down by questions about strategy, balance sheet resilience, and the value of their US digital infrastructure exposure. The market had grown tired of waiting for clarity. Yet this morning, both stocks surged more than 10% on the ASX, and the catalyst was not a single datapoint but a coordinated shift in narrative.

For the first time in a long time, both groups presented a forward path that looks cleaner, more focused, and more aligned with the structural tailwinds reshaping global real assets.

Of course, there is a long way to go for both companies – maybe we’re making too big a deal over this because if there are any other companies upgrading guidance, let’s hear them. And after all, DigiCo is only making a 5% return in 18 months on a data centre – what gains could it be missing out on?

But investors begging for companies upgrading their guidance at the Macquarie Conference rather than downgrading cannot be choosers.

HMC upgrades when others are downgrading

HMC’s Macquarie Conference presentation was the standout. Again, it was one of the few companies to effectively upgrade its medium‑term outlook at the event, reaffirming its FY26 operating EPS target of more than 40c per share and providing a clearer roadmap for underlying EPS growth from FY27.

The presentation also marked a strategic reset. HMC is simplifying, scaling, and sharpening its focus on high‑ROE platforms. The group is leaning into four verticals that are underpinned by long‑term megatrends: real estate, digital infrastructure, private credit, and energy transition.

The message HMC wanted investors to hear is that is now a capital‑light alternatives manager with a stronger balance sheet and a more disciplined operating model. The company claimed that it is “focusing on scalable, real asset‑backed verticals with recurring earnings” and that simplification initiatives will deliver $15m of run‑rate cost savings from FY27.

Amongst other things, HMC told investors of its decision to wind down the HMCCP private equity fund and return capital to unitholders was a major step. The fund had delivered a 17.5% IRR for investors who entered at inception, but HMC acknowledged that the structure was no longer optimal. As its presentation put it, “fund structure requires ongoing deployment, but the best opportunities are episodic by nature.” By retaining its pro‑rata stakes on balance sheet, HMC keeps exposure to upside while removing the structural drag.

The market has been waiting for this. Investors had grown increasingly concerned that HMC was juggling too many moving parts. Today’s update showed a business that is now prepared to prioritise. The simplification of US digital operations, the integration of funds management support functions, and the recycling of capital out of lower‑return assets all point to a more streamlined organisation.

The reaffirmation of earnings guidance added credibility. In our view, the market rewarded the clarity as much as the numbers.

DigiCo delivers too

DigiCo’s announcement was equally significant. The sale of the Chicago CHI1 data centre for US$750m at a 5% premium to the purchase price paid 18 months ago was the headline. Whilst the company could be missing out on a lot more upside, the real story (and why investors overlooked that fact) was its balance sheet transformation.

Once the proceeds are received, DigiCo will reduce net debt from $1.5bn to roughly $0.5bn and cut gearing from 36% to 17%. The release of capital is substantial. For a REIT that had been trading at a persistent discount to NAV, this was the circuit breaker.

The deleveraging gives DigiCo the financial capacity to accelerate its most compelling growth project: the SYD1 expansion. The 88MW development is a multi‑year, high‑ROIC opportunity that positions the REIT squarely in the slipstream of Australia’s AI‑driven data centre boom.

Practical completion of the first 15MW of the 20MW upgrade has already been achieved, with the remaining 5MW due before 30 June. The company noted that the project is underpinned by “sustained customer demand” and that SYD1’s status as a globally relevant, network‑dense facility continues to attract interest from hyperscalers and enterprise customers.

The US asset sales also remove a key overhang. Investors had been uneasy about the pace of US expansion and the capital intensity of the strategy. By monetising CHI1 and exploring options for LAX1 and LAX2, DigiCo is signalling that capital will be allocated where returns are highest.

Its Kansas City and Dallas Fort Worth assets remain in the portfolio, but the message is that the REIT will manage them for value rather than scale for the sake of scale. The announcement made this explicit: “DGT will continue to actively manage these assets with a focus on maximising value for securityholders.”

So What’s The Takeaway From These Two David Di Pilla-Backed REITs?

The market’s reaction to both announcements reflects a broader shift in sentiment. Investors are increasingly rewarding companies that demonstrate discipline, clarity, and a willingness to pivot. The past two years have been defined by rising rates, higher capital costs, and a reassessment of what constitutes sustainable growth. REITs with complex strategies or elevated gearing have been punished. Today’s rally suggests that both HMC and DigiCo have finally addressed the concerns that had been weighing on their share prices.

There is also a deeper thematic at play. The US remains the global epicentre of AI adoption and data centre investment. While both companies are recycling capital out of the US, the opportunity set created by AI is still central to their strategy. The difference is that capital is now being deployed more selectively. For DigiCo, the focus is on SYD1, a Tier 1 Australian asset with strong interconnection density and a clear demand pipeline. For HMC, the digital infrastructure vertical remains a core pillar, but the emphasis is on higher‑returning Australian opportunities rather than a sprawling US footprint.

The AI theme is not going away. Global data centre capex is forecast to exceed US$1 trillion by 2028, and Australia’s capacity is expected to more than double by 2030. HMC’s presentation highlighted this explicitly, noting that digitalisation is reshaping economies and that the demand for processing and storage is accelerating. The group’s exposure to data centres through DigiCo and its broader digital infrastructure strategy positions it to benefit from this trend without overextending its balance sheet.

The same logic applies to private credit and energy transition. HMC has more than $1bn of incremental AUM in advanced documentation for its CRE private credit platform, which will scale AUM to more than $3bn. The energy transition vertical, supported by a ~$0.6bn partnership with KKR, has a 5.7GW pipeline and the potential to generate private equity‑style returns. These are long‑duration themes that align with the structural megatrends HMC has built its strategy around.

So Onwards and Upwards From Here?

The question now is whether today’s rally marks the beginning of a sustained re‑rating. In our view, both companies have done the hard work. They have simplified, deleveraged, and refocused. They have reaffirmed guidance and provided visibility on medium‑term earnings. They have aligned their strategies with the sectors that are attracting global capital. The market has responded because the narrative has shifted from complexity and uncertainty to clarity and execution.

HMC and DigiCo have not solved every challenge facing them, but they have turned a corner. Today’s price action reflects a market that is prepared to give them the benefit of the doubt. The next phase will depend on delivery. If SYD1 progresses as planned, if private credit mandates convert, and if the simplification initiatives translate into higher ROE, the re‑rating could have further to run.

For now, the message is simple. Investors wanted focus, discipline, and a credible growth story. Today, both companies delivered exactly that.