NextDC ramps up third Sydney data centre efforts with $672M investment drive

Development approval (DA) of the new facility was officially granted in December 2019

Comments

Publicly-listed data centre builder NextDC is stepping up its efforts to build its third Sydney data centre (S3), launching an equity raising effort of around $672 million.

NextDC announced plans in April 2018 to raise $281 million to purchase three new commercial property sites for future data centre developments, one of which was a new Sydney data centre, its third in the city.

Development approval (DA) of the new facility was officially granted in December 2019.

Now, due to the strong demand NextDC is facing in the current climate, the company is moving another step towards the construction of the first tower of S3, located at Gore Hill.

The initial IT load in Phase 1 will be 12MW, and it is expected to be complete in the first half of FY22, with a target capacity of 80MW.

There will be $350 million allocated towards the S3 centre; $307 million will be put towards growth driven initiatives including capacity requirements and development opportunities and $15 million towards transaction costs.

NextDC said its NSW facilities have reached 70 per cent of contracted utilisation, with further contracts expected in the near-term, and has experienced a step-up in demand particularly from its hyper scale cloud computing customers.

“Based on the strong level of orders already received for S2, and our growing confidence in the forward sales pipeline, NextDC is confident that the projected demand in Sydney, together with our return expectations, warrants the next phase of investment in Sydney’s third generation of data centres,” NextDC CEO Craig Scroggie said.

Due to the strong demand, NextDC said it will evaluate a range of growth initiatives, which are at an advanced stage including additional data hall capacity at its existing locations, and acquisition opportunities.

“NextDC continues to see significant demand for its data centre services during a turbulent market environment due to COVID-19. We’ve decided to prudently equity fund near-term growth opportunities in this period of market volatility to continue to support customer demand and ensure there is no loss in the momentum of the company’s development,” Scroggie said.