Digital Realty is looking to expand its presence in the Asia Pacific region, as the company expects a blowout in demand for data centres.
APAC Expansion
In its Q2 2021 quarterly results, Digital Realty said that it plans to expand in Australia, India and South Korea. In the second quarter, Digital Realty purchased an 18.5-acre land parcel in Sydney, Australia for $65 million.
This land parcel will support the development of 97 megawatts of IT load. Similarly, in the India market, in mid-July 2021, Digital Realty and Brookfield Infrastructure Partners announced the establishment of a 50:50 joint venture to develop and operate data centres in the country.
This partnership will operate under the brand BAM Digital Realty. During Q2 2021, Digital Realty acquired a five-acre land parcel in Seoul, South Korea. For this parcel, the company paid $66 million.
The parcel is located at Gurae-dong, Gimpo City in northwest Seoul, 14 miles from Digital Seoul 1 (ICN10), which was Digital Realty’s first facility in South Korea. Also, Digital Seoul 1 (ICN10) is under construction and scheduled for delivery in Q4 2021.
Digital Realty’s new land parcel will support the development of a multi-story facility with up to 64 megawatts of critical IT capacity across 970k sq ft. The facility, dubbed Digital Seoul 2 (ICN11), is expected to be fully operational by the first half of 2023, the company said.
Once completed, Digital Realty will target hyperscale customers which have shown strong demand to-date in Seoul, South Korea.
Digital Realty’s data centre development pipeline (excluding 20 powered shell investments) was estimated to be $3.8 billion, with 288 megawatts of power capacity under construction. Overall, these projects are 42 per cent pre-leased.
Overall, Digital Realty is allocating 50 per cent of its development capital expenditures to five metros. These cities include Paris, France; Frankfurt, Germany; Hillsboro (Portland), U.S.; Osaka, Japan; and Tokyo, Japan. In Q2 2021, Digital Realty reported revenue of $1.1bn, which was unchanged quarter-over-quarter, and adjusted EBITDA of $603 million, a 2 per cent quarterly decrease.
Here are some key takeaways regarding its colocation and hyperscale data center leasing activity, and geographic expansion of its portfolio in Australia, South Korea and India.
In Q2 2021, new lease signings were $113m, down 3% when compared to $117 million of signings in Q1 2021. In total, the new lease signings represented 58.7 megawatts of power capacity and 558,000 sq ft.
Colocation
Under 1-megawatt signings were $41.2 million, which is an all-time high for Digital Realty. This works out to be around 36 per cent of total signings.
Hyperscalers
Over 1-megawatt signings amounted to $59 million, which is 52 per cent of total signings. Interconnection contributed $12.6 million or 11 per cent of total signings.
The new lease signings during Q2 2021 were as follows;
In Asia Pacific, new lease signings were $20.9 million, for 6.8 megawatts of power capacity and 64,000 sq ft. In EMEA, new lease signings came in at $24 million, for 10.1 megawatts of power capacity and 112,000 sq ft.
New lease signings in Americas were $55.8 million, for 41.8 megawatts of power capacity and 382k sq ft.
Further, in these geographies, Digital Realty leased 24+ megawatts in Hillsboro/Portland, 6+ megawatts in Tokyo and 11+ megawatts in Northern Virginia and Toronto, Canada combined.
Digital Realty signed renewal leases which was $178 million of rental revenue during Q2 2021. The weighted-average lease term on renewals signed during Q2 2021 was <3 years, reflecting a greater mix of colocation deals of <1-megawatt, the company said.
