DigiCo signs 15-year, 71MW contract at Sydney data centre

DigiCo Infrastructure REIT has executed a 15-year contract for 71MW of capacity at its Sydney data centre, SYD1, with a global technology firm backed by investment-grade credit support.

The contract takes SYD1 to 100% contracted across 88MW of total capacity, DigiCo said.

The 71MW includes the reallocation of 20MW of existing contracted capacity to the new customer, with the remaining 17MW of SYD1 capacity leased to co-location customers.

The deal extends the weighted average lease expiry of DigiCo's Australian portfolio from approximately three years to more than 10 years, with weighted average annual escalations of approximately 3%. Renewal spreads across the Australian portfolio have averaged approximately 8 per cent since the REIT's IPO.

The first 10MW of the SYD1 expansion is expected to be energised and income-producing in late Q4 FY27, with the balance delivered progressively across FY28 in line with customer requirements.

Shape Australia Pty Ltd has been appointed head contractor for the SYD1 expansion on a fixed-price lump-sum Design and Construct contract.

Laing O'Rourke continues as integrated delivery partner and will lead overall delivery of the expansion, which involves the adaptive reuse of an established data centre asset with approved grid capacity, water access and State Significant Development Approval in place.

The Design and Construct contract is consistent with DigiCo's previously announced combined SYD1 and ADL1 capital expenditure estimate of $1.2 billion over FY27–FY28.

FY27 capital expenditure is expected to total $300–$500 million, weighted to the second half, and the expansion remains fully funded from existing liquidity and available debt facilities, together with proceeds from US asset sales.

"Execution of the 71MW contract at SYD1 is a key milestone for DGT," said Simon Mitchell, co-head and chief financial officer at DigiCo.

"The 15-year agreement with a global technology firm provides long-term earnings visibility, supported by investment grade credit backing. It validates the quality of our infrastructure and strengthens the quality of cashflows from our portfolio .

Mitchell said when DigiCo acquired SYD1, the business plan was to fully lease and develop the site to 88MW over five years, and the company now expects to reach that milestone well ahead of schedule.

Together with ADL1, the SYD1 expansion is expected to materially increase DigiCo's contracted Australian capacity and underpin the company's previously announced pathway to approximately $250 million of Australian Platform Stabilised EBITDA.

DigiCo reaffirmed FY27 underlying EBITDA guidance of $120–$125 million, inclusive of two months of EBITDA contribution from CHI1 prior to completion of its sale.