Highlights

  • DigiCo has signed a long-term SYD1 capacity contract with a global technology customer, subject to conditions and approvals.
  • The agreement would bring total contracted SYD1 capacity to 88MW, including existing co-location leases.
  • The Australian portfolio’s pro forma weighted average lease expiry would move beyond a decade.
  • The SYD1 expansion is described as fully funded, with commissioning spread across FY27 and FY28.
  • FY27 underlying EBITDA guidance remains unchanged, while construction delivery and approvals remain important variables.

DigiCo Infrastructure REIT (ASX:DGT) invests in, operates and develops data centres serving cloud, enterprise and high-density computing customers. Its latest Sydney leasing agreement brings the timing and funding of additional capacity at SYD1 into focus. Announced on 15 October 2026, the transaction covers 71MW for a global technology firm, although customary conditions and approvals must still be satisfied.

How the SYD1 Agreement Fits Together

The customer agreement runs for 15 years and includes renewal options and investment-grade credit support. DigiCo Infrastructure REIT (ASX:DGT) states that 20MW of the 71MW comes from capacity already contracted at SYD1 and reallocated to the new customer. A further 17MW is leased to co-location customers. The resulting 88MW represents the site’s total contracted capacity rather than 71MW of entirely additional demand.

The proposed SYD1 expansion adds 52MW through adaptive reuse of an existing data centre. DigiCo identifies existing grid capacity, water access and State Significant Development Approval among the site’s development attributes. The release does not define each megawatt capacity measure.

A Longer Contracted Income Profile

The agreement also changes the reported duration of DigiCo Infrastructure REIT (ASX:DGT)’s Australian contracted income. On a pro forma basis at 30 September 2026, portfolio weighted average lease expiry would rise from approximately three years to more than 10 years. The calculation uses contracted income and excludes pass-through recoveries; its outcome depends on the agreement proceeding.

Funding and Construction Milestones

DigiCo Infrastructure REIT (ASX:DGT) says the SYD1 expansion is fully funded without new equity, using existing liquidity, available borrowing facilities and expected proceeds from United States asset sales. The combined capital expenditure estimate for SYD1 and ADL1 is $1.2 billion across FY27 and FY28. FY27 expenditure is expected to total $300 million to $500 million, predominantly in the second half.

Under a fixed-price lump-sum design-and-construct contract, Shape Australia is the head contractor and Laing O’Rourke is the integrated delivery partner. The first 10MW of expansion capacity is expected to become energised and income-producing in late Q4 FY27. Remaining capacity is scheduled for progressive delivery during FY28, while the existing data centre continues operating.

Guidance and Project Dependencies

DigiCo Infrastructure REIT (ASX:DGT) reaffirmed FY27 underlying EBITDA guidance of $120 million to $125 million. That guidance includes two months of EBITDA from CHI1 before its anticipated sale. Management also outlines a pathway towards approximately $250 million in Australian platform stabilised EBITDA from SYD1 and ADL1, defined as annualised earnings after stabilised occupancy.

The stabilised measure is a company estimate rather than a current result. Completion conditions, the construction programme, capacity activation, funding execution and subsequent occupancy all affect the timing of income. The announcement does not disclose a SYD1 development yield, return on cost or project-level EBITDA, limiting more detailed assessment of project economics.

Key Insights

The SYD1 contract gives DigiCo Infrastructure REIT (ASX:DGT) a longer-dated contracted capacity profile at a major Sydney asset, subject to outstanding conditions. Its significance lies in the relationship between committed leases, the staged expansion and the capital required to deliver capacity. Reported guidance and stabilised earnings expectations should remain distinct from income already generated.