NAB data centre ready for racks

Digital Realty is in the final stages of testing its first Melbourne data centre, and plans to have racks in place for National Australia Bank within a week.

Linked gallery: Photos: NAB's Melbourne data centre

Kris Kumar, Digital Realty vice president for the Asia Pacific, said the company has finished the construction phase for the data centre.

Digital Realty’s operations staff is in place, and independent third party contractors are testing the mechanical and electrical plant to ensure it is ready for the bank’s equipment.

“We put everything under stress,” Kumar said. “We put all the mechanical and electrical systems under load. We fail them, and we see how they behave and react, to ensure they work as designed.”

Digital Realty is also simulating the heat load generated by full racks of servers using portable heaters.

The company will then install server racks for NAB and open the doors for the bank to move in.

The build has taken nine months since the completion of planning approvals. Digital Realty boasts that it can build facilities in as few as 20 to 26 weeks in other countries.

Achieving that in Australia requires “getting local construction companies tuned to our way of working," Kumar said.

“We’re [nonetheless] going to be finished a month and a half before schedule,” he said.

NAB should — if all goes to plan — begin moving its equipment in by mid-January 2013.

Kumar said a second adjoining data centre will be “coming out of the ground” in Melbourne in August or September 2013.

Digital Realty has committed to building 20 MW of capacity and 15,000 square metres in Australia between this dual site in Melbourne and another dual site in Erskine Park, Sydney, for which Rackspace is first tenant.

The company has close to 110 other data centre properties around the globe.

Fast money

Last week, the company's CFO William Stein flew into Australia to provide institutional investors such as AMP and Colonial First State a tour of the construction sites.

Stein told iTnews that the US$8 billion market cap company has the financial scale to modernise the world's data centre footprint at speed.

Even considering Australia's relative success in global markets and the high domestic demand for data centre space, local builds have struggled for access to capital to construct facilities. 

But Stein said Digital Realty has no such trouble.

“It helps to have a track record when you’re going to raise capital,” he said. “If you don’t have a track record it’s almost impossible to raise it.

"We've been very good at driving down our costs of capital. We have investment grade debt ratings from the ratings agency in the states. That ensures access to capital, almost under any circumstances. If you don't have those ratings, access can be a challenge. That rating also gives you the best priced capital."

Small-scale builds are often financed via secured funding — a variant of the mortgage model you might use to finance your own home.  These can take 90 or 120 days to negotiate, Stein said, and are "typically more expensive."

"The mortgage lenders restrict your ability to operate your assets," he said. "You have to go back to them for approvals on building a wall or signing a lease or anything that affects their collateral."

Junk bonds and high-yield bonds, he said, are faster but also very expensive.

Digital Realty can sell bonds in 24 hours, he boasted.

"I can use three or four underwriters (investment bankers) and sell $500 million worth of debt – launch early in the morning and be done at 1pm in the afternoon. That assumes the investment community is happy with the peformance of your company and that you’re selling into a good market."

Investors see it as a good market, he argued, as data centres are not influenced by the level of consumer spending or employment — regulatory requirements for business continuity and data retention will keep the likes of Digital Realty in demand for some time to come.

Digital Realty's Kris Kumar is a keynote speaker at the Data Centre Strategy Summit at the Royal Pines on the Gold Coast on February 11-13. He will describe how the company finances its data centre investments - which include the buying and leaseback of ageing enterprise and government data centres.