Logistics real estate firm ESR has reportedly acquired land previously earmarked for a Digital Realty data center in Sydney, Australia.

The Australian Financial Review recently reported Digital Realty had sold two industrial sites based in west Sydney for a combined AU$210 million (US$137m) late last year.

syd11 construction aerial shot 3 july 2018 digital realty sydney
Digital's existing SYD11 facility in Erskine Park – Digital Realty

AFR said the sites, at Horsley Park (aka SYD16) and Erskine Park (SYD15), were sold to ESR for AU$114.4 million (US$74.57m) and ESR subsidiary Logos for AU$96 million (US$62.57m) respectively.

The colocation company previously said it acquired the sites – totaling 162,000 sqm (1.74 million sq ft) – in 2020, saying at the time they could support up to 250MW of capacity.

Digital reportedly paid around US$61 million in October 2020 for the 20-acre plot in Horsley Park; it is unclear what the operator paid for the 20-acre parcel in Erskine Park.

However, while it seemed to confirm at least one of the land sales had happened, Digital has contested some aspects of the report, saying it never actually had one of the sites under ownership or lease, and had not sold the other parcel.

A spokesperson for Digital Realty told DCD: “One of Digital Realty’s key priorities is to bolster our balance sheet and diversify our sources of capital. As such, from time to time, you should expect us to sell certain assets and utilize other funding vehicles, with the purpose of recycling capital from our existing portfolio and fortifying our long-term sustainable growth."

Regarding the AFR article, Digital labelled it “erroneous,” concerning two specific items:

“We never owned or leased the SYD16 (Horseley Park site), as the article suggests - the site was owned and sold by a third party. And we have not sold SYD15 (Erskine Park site).”

Digital declined to elaborate further when questioned by DCD, including the ownership/lease status of the Erskine Park (SYD15) site and future plans for it.

Update: In its Q4 2023 earnings results published this month, Digital Realty said completed the sale of an option maintained on a second parcel of land in Sydney, Australia with an area of 21 acres for approximately AU$29 million (US$20m).

DCD has reached out to ESR for comment but is yet to receive a reply at the time of writing.

Digital currently operates two data centers in Sydney within Erskine Park; SYD10 at 1-12 Templar Road, and SYD11 at 13-23 Templar Road.

Launched in 2012, the single-story SYD10 spans 86,200 sq ft (8,000 sqm) and offers 6MW.

After starting construction in 2017, the company opened SYD11 (also known as Digital Erskine Park II) in 2018; the two-story facility offers 19MW across 176,150 sq ft (16,365 sqm).

At the time of SYD11’s launch, the company also announced it had acquired an additional 1.4 hectares in the area for a 12MW data center known as Digital Erskine Park III.

ESR, with backing from investors such as Warburg Pincus, has plans to build a data center ecosystem across the APAC region - buying a data center in Osaka, Japan, in April 2021, which it plans to develop into a three-facility campus.

It also announced plans for a 20MW data center in Tokyo in 2022 and is partnering with Stack for another data center in Osaka as well as Seoul in South Korea. An existing facility in South Korea was sold late last year.

ESR has previously said it is developing a portfolio of data centers in Hong Kong, Osaka, Tokyo, Seoul, Sydney, Mumbai, and Singapore. ESR subsidiary ARA Asset Management also has a data center footprint through its Logos Group unit, which partnered with Pure Data Centres for a 20MW facility in Indonesia.