Equinix today announced a new $575m joint venture agreement with PGIM Real Estate, the real estate investment management business of Prudential Financial, to extend its hyperscale data center program, known as xScale, into Australia. Specifically, Equinix’s xScale data center joint venture will develop and operate two facilities in Sydney, Australia, known as SY9x and SY10x, providing more than 55 megawatts of power capacity.
Overall, Equinix owns a 20% equity interest and PGIM Real Estate owns the remaining 80% of the joint venture company. Finally, the joint venture is expected to close in Q4 2021, with Citi serving as financial advisor to Equinix.
xScale Data Centers in Sydney, Australia – Equinix, PGIM Real Estate
Initially, Equinix and PGIM Real Estate’s xScale joint venture will build-out its first data center in Sydney, Australia, known as SY9x, which is expected to open in Q1 2022. Ultimately, SY9x and SY10x will provide more than 55 megawatts of power capacity.
Market Backdrop
In Sydney and Melbourne, Australia, built-out hyperscale colocation capacity, in megawatts, is forecasted to increase at a compound annual growth rate (CAGR) of 22%, from 2021 to 2026. Furthermore, Australia’s hyperscale capacity will grow at ~2x the rate of the retail segment through 2026. Therefore, Equinix is focusing on growing its hyperscale presence, relative to its established portfolio of traditional retail IBX data centers in Australia (see below).
Equinix – Retail Data Center Presence in Australia
Equinix operates 17 data centers in Australia, which will increase to 18 when PE3 in Perth opens in Q4 2021. Particularly, Equinix has a presence across Australia’s six largest cities, namely Sydney, Melbourne, Brisbane, Perth, Adelaide, and Canberra:
- Sydney: 8 facilities total (SY1 through SY8), which comprise $869m USD in total investment
- Melbourne: 4 facilities total (ME1, ME2, ME4, ME5), which comprise $326m USD in total investment
- Brisbane: 1 facility (BR1), which comprises $7.4m USD in total investment
- Perth: 3 facilities total (PE1, PE2, PE3), which comprise $82m USD in total investment
- Adelaide: 1 facility (AE1), which comprises $6.0m USD in total investment
- Canberra: 1 facility (CA1), which comprises $27m USD in total investment
In aggregate, these 18 data centers encompass $1.3bn in total investment by Equinix, ~$800m of which came from Equinix’s acquisition of Metronode in 2018.
xScale Joint Ventures – Equinix, GIC, PGIM Real Estate
Equinix’s new joint venture with PGIM Real Estate builds on its earlier partnership with GIC, which was significantly upsized in June 2021.
At full build-out, the total investment across Equinix’s xScale data center joint venture with both GIC (Europe, Asia-Pacific, and the Americas) and PGIM Real Estate (Australia) will be over $7.5bn, across 34 facilities globally with 675+ megawatts of power capacity.
xScale Operational Portfolio
Presently, 6 xScale data centers are operating in Asia-Pacific, EMEA, and Latin America. Specifically, these include Tokyo TY12x, Paris PA8x, Paris PA9x, London LD11x, London LD13x, and São Paulo SP5x.
As of Q2 2021, Equinix had leased 109 megawatts of its xScale capacity, including all of its operational xScale capacity.
Hyperscale Customers
xScale serves the core workload deployment needs of hyperscale companies, including large cloud service providers. These core workload deployments add to the existing access point footprints of these hyperscale customers at Equinix’s facilities. In turn, this architecture enables hyperscale companies to offer direct interconnection, across Equinix’s ecosystem, to their own customers.
Overall, these cloud service providers include Amazon Web Services, Microsoft Azure, Google Cloud, IBM Cloud, Oracle Cloud, and Alibaba Cloud.
