At a glance
- NEXTDC has disclosed 1,200MW of computing capacity at M5, more than four times the 288MW it has built across its whole portfolio.
- Craig Scroggie expects the company can go from bare ground to a fully operating facility in about nine months, against the 18 months he said it may have taken before.
- The target on new large AI sites is more than 10 per cent a year on what they cost to build, a figure Scroggie called conservative.
- NEXTDC now names M5 alongside S4 and S7 as a joint venture candidate, extending a plan it flagged in August 2025 for 850MW in Sydney.
- Water use and power usage effectiveness both moved up in FY26, a third consecutive year of increases.
NEXTDC put 1,200MW on a single site
NEXTDC gave M5 a capacity figure for the first time at its FY26 results briefing on 28 August 2026. Chief executive Craig Scroggie called it "the recently acquired Melbourne M5 site" and put it at 1,200MW of IT load, the power drawn by the computing equipment itself. In June 2026 the same project sat in the company's investor materials as "under evaluation".
M5 alone is planned at more than four times the 288MW NEXTDC has built across its entire portfolio, and more than twice the 537MW it has under construction. It is planned larger than S4 Sydney at 365MW and S7 Eastern Creek at 650MW put together. On the call Scroggie named no location beyond Melbourne. The subsidiary that settled a A$165 million purchase of 169 hectares at Lovely Banks near Geelong in June 2026 is named NEXTDC M5 Holdings Pty Ltd.
| Site | Planned capacity | Stage |
|---|---|---|
| S4 Sydney | 365MW | 250MW under construction, 115MW to sell |
| S7 Eastern Creek | 650MW | In planning |
| M5 Melbourne | 1,200MW | Capacity given, location not named |
Source: NEXTDC FY26 results presentation and results briefing, 28 August 2026.
Scroggie expects NEXTDC can build a site in nine months
Scroggie told analysts his expectation now is that NEXTDC can go from ground to a fully operating facility in about nine months, against the 18 months he said it may historically have taken, on what he calls "a manufacturing style of construction methodology". He prefaced it by saying NEXTDC has not yet started a construction program on that basis.
The nine months applies to sites not yet started, so it bears on the more than 3GW of planned capacity NEXTDC has flagged rather than on the 537MW already under construction.
On timing, Scroggie said FY27 is back-ended, referring to the 73MW NVIDIA contract, which he said is under construction and will be delivered in record time.
Ten per cent a year on build cost is the target for new sites
NEXTDC is targeting a yield on cost above 10 per cent on new large-scale cloud and AI data centre deployments, meaning annual earnings above 10 per cent of what the site costs to build. Scroggie called that forecast conservative.
An incoming capital partner prices against that number. NEXTDC has not given a yield on cost for M5, and Scroggie did not say what return the site would need to clear.
M5 is now a joint venture candidate alongside S4 and S7
NEXTDC first flagged a joint venture over S4 and S7 with its FY25 result in August 2025. It targeted about A$15 billion over ten years or more for 850MW of new capacity in Sydney, a financial close inside 12 to 18 months, and a minority stake for itself while keeping the management work. Goodman uses a similar structure, with outside capital holding the asset while the operator develops and runs it.
Scroggie volunteered on the call that it is "reasonable to assume that M5 would be another asset that we would consider doing a JV on". Chief financial officer Oskar Tomaszewski said NEXTDC could exclude the S4 development from its guarantor group, the set of companies that stand behind its corporate debt. That would give it the option to fund S4 through project finance, meaning borrowing secured on the project rather than on the group.
Scroggie wants S4's remaining 115MW contracted before a partner comes in, so a partner buys a fully sold 365MW site rather than one only part let.
Eric Choi of Barrenjoey took management through his own valuation of the sites. Against about A$9.2 billion of historical spend he asked whether an implied value of about A$14 billion was broadly correct. On S4 and S7 he put in about A$15 billion of capital expenditure, took about A$10 billion of debt off and assumed NEXTDC held 20 per cent of the equity left, which put the two at about A$23 billion once complete. Scroggie said those numbers were "directionally right", noting the return figure is forward-looking and excludes the higher-yielding legacy colocation business inside that A$9.2 billion. On the split he said 20 per cent is not decided and may be one end of the spectrum.
NEXTDC moved M3 Melbourne, S4 and M5 into investment property before signing any deal, carrying them at market value rather than at cost less depreciation, and booked a A$495.6 million paper gain on the transfer. Scroggie said S7 "springs to mind" as the next site that could be reclassified the same way.
Shares closed up 2.14 per cent after opening 6.8 per cent higher
NEXTDC shares opened 6.8 per cent higher on 28 August 2026 at A$14.51 and touched A$14.78, then closed at A$13.87, up 2.14 per cent, on volume of 4.70 million against a 2.04 million average. Earnings before interest, tax and depreciation beat the average analyst forecast compiled by Visible Alpha, Reuters reported. NEXTDC reported in the August 2026 season.
NEXTDC used more water and power per unit of computing in FY26
Water use rose to 2.40 litres per kilowatt hour of energy from 2.25, and power usage effectiveness, the ratio of total site power to the power reaching the computers, went to 1.49 from 1.44. Reuters reported NEXTDC attributed the increases partly to newly commissioned capacity and partly to a data reconciliation exercise that uncovered leaks and meter anomalies. Both ratios have now moved up three years running.
What to watch
Whether the nine months holds. No site has been built on that model yet, so the first test is a greenfield start rather than capacity already under way.
Where M5 goes. Melbourne is all NEXTDC has said.
The equity split. Barrenjoey assumed 20 per cent; Scroggie said it is not decided.
S4's last 115MW. Scroggie said the timing of the joint venture on S4 depends on locking in that final 115MW.