KUALA LUMPUR (May 23): Sime Darby Property Bhd (KL:SIMEPROP) said on Thursday it will build and lease out a hyperscale data centre at its Elmina Business Park in a deal worth RM2 billion, marking the group’s entry into the data centre segment.

The project is expected to begin in the second quarter of this year, and be completed in 2026, the developer said in a bourse filing. Once construction is completed, the group will sign a 20-year lease (initial term) with Pearl Computing Malaysia Sdn Bhd — a wholly-owned unit of Singapore-based Raiden APAC Pte Ltd — with options to renew for two additional five-year terms.

According to Sime Darby Property, Raiden APAC is part of an undisclosed multinational technology corporation, which is headquartered in the US.

"The rent during the lease period shall be determined based on the final gross development cost of the project, which is in turn to be determined upon the finalisation of the project’s final accounts. The total value of rent payable to the lessor by the lessee over the initial term of the lease is estimated to be up to RM2 billion," its filing read.

The data centre in Malaysia will be situated on a 49-acre (19.83-hectare) site within the 1,500-acre Elmina Business Park, the largest freehold industrial park in the Klang Valley.

According to Sime Darby Property, the group and its flagship Elmina Business Park were chosen based on strategic merits, including the group’s 50-year track record in large-scale integrated projects, the park’s robust infrastructure and prime location, as well as the group’s financial strength, which assures long-term lease certainty.

Sime Darby Property group managing director Datuk Azmir Merican said the project aligns with the group’s SHIFT25 strategy to grow recurring income, enabling it to expand its investment and asset management portfolio.

“This facility will elevate the Elmina Business Park’s status as a premier industrial location for technology corporations, both local and international. This achievement reflects the effort invested in its realisation. We would also like to acknowledge local municipal authorities, government agencies, and utility providers who have supported us, as their contributions have been instrumental in advancing this project, which is of national significance,” he said in a statement.

Sime Darby Property expects revenue from the project to be recognised on commencement of the lease in the financial year ending Dec 31, 2026 (FY2026).

The developer's share price closed at RM1.16 on Thursday — its highest in six years, giving it a market capitalisation of RM7.89 billion — after climbing nine sen or 8.41%, following better-than-expected first-quarter earnings. The stock has climbed over 87% year-to-date.

The group made a net profit of RM123.58 million for the first quarter ended March 31, 2024 (1QFY2024), more than double the RM60.67 million it made for the same quarter a year earlier, as revenue jumped 42.81% to RM978.69 million, from RM685.33 million previously, amid higher sales and successful project executions.