At a glance
DigiCo Infrastructure REIT has signed a 15-year contract for 71MW at SYD1, its Ultimo data centre, with a global technology firm it has not named.
The deal takes DigiCo's SYD1 to 100 per cent contracted across its 88MW, about 22 months after DigiCo bought the site from Global Switch, on a plan that allowed five years.
Shape Australia will build the 52MW expansion under a fixed price contract Shape values at about A$800 million, with the first 10MW due late in FY27.
The contract lifts the average remaining lease term across DigiCo's Australian portfolio from about three years to more than 10 years.
DigiCo says the expansion needs no new equity, and its securities closed 2.9 per cent lower on the day, a smaller fall than NEXTDC or Macquarie Technology.
DigiCo Infrastructure REIT has signed a 15-year contract with an unnamed global technology firm for 71MW at SYD1, its data centre in Ultimo on the edge of the Sydney CBD.
The ASX-listed owner, which is managed by HMC Capital, announced the deal on 15 October 2026. The customer has investment grade credit support, DigiCo says. The contract carries renewal options and remains subject to customary conditions and approvals.
The contract takes SYD1 to fully contracted across its 88MW about 22 months after DigiCo bought the site in December 2024, under a five-year plan to lease and develop it.
"We now expect to reach that milestone well ahead of our original plan," co-head and chief financial officer Simon Mitchell said. The deal comes 55 days after DigiCo's FY26 result on 21 August, when letters of intent covered the 52MW expansion and binding documents were still to be signed.
The contract lifts DigiCo's average lease term past 10 years
Of the 71MW, 20MW is capacity already under contract at SYD1 that DigiCo has reallocated to the new customer, so 51MW is newly contracted. Colocation customers, which rent space and power inside a shared facility, hold the remaining 17MW.
SYD1 capacity | MW | Status |
|---|---|---|
New customer | 71 | 15-year contract, includes 20MW reallocated |
Colocation customers | 17 | Existing leases |
Total | 88 | 100% contracted |
Source: DigiCo Infrastructure REIT ASX release, 15 October 2026.
The contract lifts the weighted average lease expiry of DigiCo's Australian portfolio, the average time left on its leases weighted by contracted income, from about three years to more than 10. The figure is pro forma at 30 September 2026. It assumes all 88MW is earning income, which on DigiCo's timetable happens no earlier than FY28.
Rents rise by about 3 per cent a year on average, weighted by contracted income, through a mix of fixed increases and inflation-linked reviews, with inflation assumed at 3.0 per cent. Across DigiCo's Australian portfolio, rents on renewal have risen by about 8 per cent on average since it listed, according to the release.
Shape values the expansion contract at about A$800 million
Shape Australia built the first 20MW stage at SYD1, and it is back as head contractor for the 52MW expansion. The design and construct contract has a fixed price, which Shape put at about A$800 million in its own ASX release on 15 October. Works were expected to start immediately, Shape said. Laing O'Rourke stays on as integrated delivery partner and will lead overall delivery, according to DigiCo.
The project reuses an existing data centre rather than a new site. SYD1 already has approved grid capacity, water access and State Significant Development approval, which the NSW planning department granted on 23 December 2025 for two extra levels on the facility. Shape puts the site's existing capacity at 16MW, which with the 20MW first stage and the 52MW expansion makes 88MW.
The first 10MW is due to be energised and earning income late in the fourth quarter of FY27, which ends on 30 June 2027. The rest follows across FY28, timed to the customer's needs. Co-head and chief development officer Ralph Goninan said the works "are being delivered within an operating data centre, with uptime maintained for existing customers throughout".
DigiCo will fund SYD1 without new equity
DigiCo says the construction contract is consistent with its earlier estimate of A$1.2 billion of capital spending across SYD1 and ADL1 in FY27 and FY28. It expects total capital spending of A$300 million to A$500 million in FY27, weighted to the second half. The SYD1 expansion is fully funded, DigiCo says, from existing liquidity, available debt facilities and the proceeds of US asset sales, with no new equity required.
ADL1 in Adelaide, a 15MW brownfield expansion, is the second project, which DigiCo says is underpinned by advanced customer discussions. The company expects the two projects to underpin its pathway to about A$250 million a year of Australian platform stabilised EBITDA. That is management's estimate of annual earnings before interest, tax, depreciation and amortisation once both sites reach stabilised occupancy and all contracted capacity is online and billing.
DigiCo reaffirmed FY27 underlying EBITDA guidance of A$120 million to A$125 million, including two months of earnings from CHI1 in Chicago before that sale completed in September.
All three ASX-listed operators fell on 15 October. DigiCo securities closed 2.9 per cent lower at A$2.00, against falls of 7.4 per cent for NEXTDC, to A$8.86, and 8.9 per cent for Macquarie Technology, to A$43.93.
What kind of customer fits 71MW in Ultimo?
DigiCo has said little about the customer beyond its credit support, which it has not detailed. In leasing, credit support generally means a company with a strong credit rating, often the tenant's parent, guarantees the tenant's obligations. DigiCo's FY26 presentation says the 52MW expansion was optimised to be delivered in 10MW steps to meet customer requirements.
The location is the other clue. SYD1 sits on the edge of the Sydney CBD. Most of the large Sydney campuses in our directory are in western Sydney, at suburbs including Eastern Creek, Huntingwood, Marsden Park, Kemps Creek and Erskine Park. SYD1 is also certified by the federal government at the Certified Strategic level as an enclave, where certification covers part of a building rather than the whole facility. The release does not say which part the new customer will use.
Our read, which DigiCo has not confirmed, is that the profile fits a cloud provider adding capacity close to its users more than a company training AI models. Everyday cloud services used by businesses and government agencies generally perform better the closer they sit to their users. AI training tends to need very large blocks of power and is less tied to location, and Sydney's largest new campuses in our directory are in the west. A staged build and a 15-year term also point to a customer that expects to grow into the space.
What to watch
The customer. DigiCo has not named it or given a date for meeting the contract's customary conditions and approvals.
The first 10MW. DigiCo expects it to be energised and earning income late in the fourth quarter of FY27, so the test falls on 30 June 2027.
ADL1. A signed contract for the 15MW Adelaide expansion would be the next step toward DigiCo's A$250 million earnings target.
The Los Angeles sales. DigiCo said on 10 September that the sale of LAX1 and LAX2 was in the final stages of due diligence. In August it expected the sale to close in the second quarter of FY27, which ends on 31 December 2026, and the proceeds help fund SYD1.