SINGAPORE (Aug 7): The manager of Keppel DC REIT (KDC REIT) intends to build a new shell and core data centre on vacant land within the Macquarie Business Park precinct in Sydney, Australia, as an expansion of the Macquarie Telecom data centre campus.

The expansion will be named Intellicentre 3 East Data Centre (ID3 East DC) when completed sometime between 2019 and 2020, will feature at least 86,000 sq ft of lettable area.

Development of the shell and core data centre is to be undertaken by Macquarie Telecom, the master lessee of an existing shell and core data centre – Intellicentre 2 Data Centre (IC2 DC) – and also the intended master lessee of the new shell and core data centre.  

KDC REIT’s manager expects to pay Macquarie Telecom construction costs of about A$26-36 million ($26.3-36.4 million) once the facility is completed.

A new 20-year triple-net master lease with Macquarie Telecom incorporating both IC2 DC and IC3 East DC shell and core buildings will commence upon completion of the development. The lease will also include built-in annual rental escalations with renewal options.

The upcoming addition to KDC REIT’s portfolio is expected to be DPU-accretive.

Assuming the completion of IC3 East DC had occurred on 30 Jun 2018, the transaction would have increased the REIT’s portfolio WALE from 8.8 years to 9.9 years. The portfolio aggregate lettable area would have increased to approximately 1,198,103 sq ft.

Highlighting Sydney as a “key data centre hub in Australia and a strategic market for Keppel DC REIT”, Chua Hsien Yang, CEO of the manager, says he continues to see growth potential in the Australian data centre market.

“The development of the new asset, which will be fully-leased upon completion, demonstrates the Manager’s ability to position the REIT for growth opportunities in the market and to create value from unutilised space within an existing asset,” says Chua.

Units in KDC REIT closed 1 cent lower at $1.39 on Monday.