NEXTDC, a data center operator in Australia, today announced its plans for a new 150-megawatt hyperscale campus in Melbourne, Australia, known as M3, which closely follows the company’s disclosure of a new 300-megawatt facility in Sydney, Australia, known as S4, just two weeks prior.
NEXTDC – Rapidly Scaling in Sydney and Melbourne
Together, this 450-megawatt power capacity expansion will significantly scale NEXTDC’s data center portfolio, over time. As a point of reference, NEXTDC reported 246 megawatts of total power planned, across its portfolio, as of December 31, 2020.
With the 450-megawatt power capacity expansions at its newly announced Sydney and Melbourne campuses, the company’s total planned capacity rises to ~700 megawatts of power capacity. Indeed, this 700-megawatt figure is slightly less than 3x NEXTDC’s total power planned, just two weeks prior.
Assuming a build cost of A$10m per megawatt, NEXTDC’s combined 450-megawatt projects in Sydney and Melbourne represent a total development cost of A$4.5bn ($3.3bn USD). Given this A$4.5bn capital need represents ~75% of NEXTDC’s ~A$6.0bn ($4.4bn USD) enterprise value, these projects are transformative for the company. Indeed, this development plan implies that a sizable debt and equity capital raise could be forthcoming, to enable NEXTDC to fund these build-outs.
Joint Venture Structure
Recently, data center operators that require sizable volumes of capital, over a long-term horizon, have elected to partner, through a joint venture structure, with long-term institutional investment partners. For example, Equinix’s xScale data center joint venture with GIC reached $6.9bn+ in June 2021. Indeed, NEXTDC could form a similar type of joint venture for its 450-megawatt developments in Sydney and Melbourne.
Notably, the idea of a hyperscale data center joint venture in Australia is also in progress at Equinix. To this end, Equinix recently noted on its Q2 2021 earnings conference call that it is actively engaged with partners to develop entry plans into other expansion markets globally, including Australia.
Sydney (S4) – Development Details – NEXTDC
NEXTDC secured a new data center site in Western Sydney, covering 1.3 million sqft (~124k sqm) for a purchase price of ~A$124m. At this site, NEXTDC will build a hyperscale data center facility, named S4, that will support 300 megawatts of power capacity.
Site Location
The S4 site is located in Horsley Park, which is ~26 miles (~42 kilometers) west of Sydney’s central business district. Additionally, the site is close to a major electricity substation as well as telecommunications, utilities, and public infrastructure.
Portfolio Composition
At this S4 site, NEXTDC will create a new Availability Zone within the Sydney, Australia market. Currently, Western Sydney is not serviced by NEXTDC’s data centers. These include both existing facilities (S1 and S2 Macquarie Park) and one under development (S3 Gore Hill).
Development Plan
NEXTDC will progressively commence development of the S4 site as the land parcels become ready for development, between June 2024 (H2 FY24) and December 2024 (H1 FY25).
Customers
Through S4, NEXTDC will provide data center services to hyperscale companies (i.e., cloud service providers), enterprises, and government entities.
Competitors in Sydney, Australia
Within the Sydney, Australia market, NEXTDC will compete against several current and future data center operators. Specifically, these operators include Equinix, Digital Realty, AirTrunk, Global Switch, Canberra Data Centres (CDC), and Macquarie Data Centres (Macquarie Telecom). Notably, during Q2 2021, Digital Realty purchased 18.5-acres of land in Sydney, Australia to develop 97 megawatts of IT load.
Melbourne (M3) – Development Details – NEXTDC
NEXTDC received formal planning consent to proceed with the construction of its new hyperscale data center campus, named M3, located in Melbourne’s west sub-market. In turn, M3 is now officially under development.
Additionally, NEXTDC acquired an incremental 430k sqft (40k sqm) of adjoining land at a cost of ~A$24m. In turn, this land will further scale the M3 site. Overall, the full M3 site now spans 1.1 million sqft (100k sqm).
NEXTDC will develop this upsized M3 site into a hyperscale data center campus with 150 megawatts of critical capacity.
Site Location
The M3 site is located in West Footscray, ~6 miles (~10 kilometers) west of Melbourne’s central business district. Additionally, the site is close to a major electricity substation as well as telecommunications, utilities, and public infrastructure.
Portfolio Composition
At this M3 site, NEXTDC will create a new Availability Zone within the Melbourne, Australia market. Furthermore, M3 will directly interconnect to M1 (Port Melbourne) and M2 (Tullamarine). This ensures that organizations in the Melbourne market can seamlessly connect to NEXTDC’s network of data centers and cloud on-ramps.
Development Plan
Presently, ground works and base building construction of the initial 13.5 megawatts power of capacity at M3 is progressing. Finally, practical completion is planned for December 2022 (H1 FY23).
Customers
Similar to its development in Sydney, NEXTDC, through its Melbourne facility, will provide data center services to hyperscale companies (i.e., cloud service providers), enterprises, and government entities.
