HMC Capital's (ASX:HMC) burgeoning infrastructure arm, DigiCo (ASX:DGT), has scrapped its plans for a major data centre development in Los Angeles.
The decision to withdraw the application for the project, known as LAX1, comes after a period of regulatory friction and cooling sentiment from local authorities regarding the site’s future utility.
The strategic pivot follows direct feedback from the City of Monterey Park Council, which informed DigiCo that planning approval for data centre operations remained "uncertain" as of Dec. 31, 2025.
The lack of a clear regulatory pathway prompted the firm to pull its application rather than risk further capital in a stalled process.
The LAX1 and LAX2 assets, which are currently held at a book value of US$71 million, were originally envisioned as a massive dual-facility hub.
Together, the adjacent sites were projected to deliver a combined 66 megawatts of capacity to the power-hungry Southern California market.
“We have voluntarily withdrawn our application for a data centre project at LAX1,” confirmed DigiCo interim CEO Chris Maher.
“We will work with the City of Monterey Park Council to establish an alternative use for the combined 33 acres of land, with a view to efficiently recycling the capital invested in both sites.”
At the time of reporting, the share prices of DigiCo and HMC Capital were $1.76 and $2.52, respectively.