A $730 million swing in property valuations in a single year
In the infrastructure beneath the digital economy, growth and loss can inhabit the same balance sheet. CDC Data Centres New Zealand, the country's largest hyperscale operator, recorded an $87.7 million net loss for FY2026 even as its revenue surged 54 percent to $134.4 million — a paradox explained not by operational weakness but by the accounting weight of property revaluations, currency shifts, and tripled debt. The story is less one of a struggling business than of a company absorbing the financial friction of rapid expansion, with its parent Infratil projecting a path toward billion-dollar earnings by FY2028.
- A $730 million swing in property valuations — from a $588.5m gain last year to a $145.6m loss this year — turned a healthy operating result into a headline net loss of $87.7 million.
- Total debt tripled to $1.03 billion, almost entirely through a related-party loan to a financing entity created just months before year-end, pushing interest costs to three times their prior level.
- A weakening New Zealand dollar against its Australian counterpart added a $45.9 million forex loss on top of the valuation and debt pressures, compounding the bottom-line damage.
- Beneath the losses, the core business is expanding: a third Auckland hyperscale facility opened during the year, capacity is on track to reach 134 megawatts, and a new 25-year, 14-megawatt contract was signed after year-end.
- The centre of gravity for future growth is shifting to Australia, where CDC is pursuing contracts of extraordinary scale — including a potential 500-megawatt slice of an Anthropic deal — leaving New Zealand as a profitable but secondary node in a much larger ambition.
CDC Data Centres New Zealand reported an $87.7 million net loss for the year ending March 2026, a dramatic reversal from the $637.6 million profit recorded the year before. Yet the company's operations told a different story: revenue climbed 54 percent to $134.4 million, and after $17.1 million in direct costs, gross profit reached $117.3 million. The loss was driven by three non-operational forces — a $145.6 million write-down on investment properties, a $45.9 million foreign exchange loss as the New Zealand dollar weakened, and net financing costs that tripled to $27 million as total debt ballooned to $1.03 billion.
Nearly all of that debt — $994.8 million — flows through a related-party loan to a financing entity created in February 2026 and owned by CDC's Australian parent. The property write-down was particularly striking given that the same asset category generated a $588.5 million gain the prior year, a swing of more than $730 million. CDC's total assets stand at $2.03 billion, with $1.93 billion classified as investment properties — almost certainly its three Auckland hyperscale data centres and the land beneath them.
Those facilities anchor CDC's New Zealand footprint. Two sites opened in 2022 in Hobsonville and Silverdale, each initially at 14 megawatts and since upgraded. A third, Hobsonville 2, opened at the start of the financial year on a 35,000 square metre site nearby. Total Auckland capacity now stands at 98 megawatts, with plans to reach 134 megawatts. Capital spending during the year totalled $203.9 million, and the company holds $102.1 million in outstanding construction and land obligations. A new 14-megawatt, 25-year contract was signed after year-end, with the customer undisclosed.
The New Zealand operation sits within a far larger Australasian expansion. Across the region, CDC's revenue grew to A$534 million and operational earnings reached A$393 million. Infratil's half-share in CDC was independently valued at A$9.2 billion in the most recent quarter — a 23.6 percent rise in a single quarter. The company has guided for FY2027 operational earnings of A$680 to A$720 million, with expectations to surpass A$1 billion by FY2028. The most ambitious growth, however, is expected to unfold in Australia, where CDC is reportedly pursuing contracts of extraordinary scale, leaving New Zealand as a profitable but supporting player in a much grander infrastructure story.
CDC Data Centres New Zealand, the country's largest operator of hyperscale computing facilities, reported a staggering $87.7 million net loss for the year ending March 2026, even as its revenue climbed 54 percent to $134.4 million. The swing from a $637.6 million profit the previous year was driven not by operational failure but by three distinct financial headwinds: a $145.6 million write-down on property valuations, a $45.9 million loss from currency fluctuations as the New Zealand dollar weakened against the Australian dollar, and sharply elevated debt servicing costs.
The company's core business remained robust. After paying $17.1 million in direct operating costs, CDC NZ generated $117.3 million in gross profit, up from $76 million a year earlier. But the company's balance sheet told a different story. Total debt had tripled to $1.03 billion, with nearly all of it—$994.8 million—flowing through a related-party loan to a financing entity created in February 2026 and ultimately owned by CDC's Australian parent. This debt explosion pushed net financing costs to $27 million, triple the prior year figure. The company did receive a tax benefit of $37.6 million, a sharp reversal from the $179.6 million tax bill it paid on the previous year's profit.
The property write-downs reflected a dramatic shift in how CDC valued its New Zealand assets. A year earlier, the company had recorded a $588.5 million gain on investment properties. This year it took a loss of $145.6 million on the same category—a swing of more than $730 million in valuation. The company lists total assets of $2.03 billion, with $1.93 billion classified as investment properties, a term CDC declined to define but which almost certainly encompasses its three hyperscale data centres and the land beneath them.
CDC operates three major facilities in the Auckland region. The first two opened in 2022: one on Westpoint Drive in Hobsonville in the city's northwest, the other in Silverdale on Highgate Parkway. Both launched at 14 megawatts of capacity—the industry's measure of peak power consumption—and have since undergone substantial upgrades. A third facility, called Hobsonville 2, opened at the start of the financial year at 92D Hobsonville Road, a 35,000 square meter property with a rateable value of $25.5 million, situated just over a kilometer from the original Hobsonville site. According to an Infratil investor presentation from September 2025, CDC's total Auckland capacity stands at 98 megawatts, with plans to reach 134 megawatts once current upgrades are complete. The company also owns two additional properties—a 28,000 square meter site in East Tāmaki and a 5,000 square meter property in Māngere—but declined to discuss whether data centre construction is planned for either location.
Capital spending on these facilities totaled $203.9 million during the financial year, down from $389.5 million the previous year but still substantial. The company reported outstanding contractual obligations of $102.1 million for future land purchases and data centre construction. After the financial year ended, CDC signed a 14-megawatt, 25-year contract expected to commence in FY2027, though it would not identify the customer. Operating expenses, including staff costs of $11 million, totaled $22.8 million, suggesting a workforce of between 75 and 100 people across its two main campuses, though the company declined to confirm exact headcount.
CDC's relationship with One NZ, the telecommunications company 99.9 percent owned by Infratil (CDC's parent), generated some noteworthy transactions. CDC received $633,000 in rental and services income from One NZ, up from $227,000 the previous year. One NZ, in turn, charged CDC $255,000 for telecommunications services, up from $130,000. These figures hint at the interconnected nature of Infratil's infrastructure holdings.
The New Zealand operation sits within a much larger Australasian footprint. Across Australia and New Zealand, CDC's revenue grew from A$446 million to A$534 million, while operational earnings before interest, taxes, depreciation, amortization, and fair value adjustments rose from A$330 million to A$393 million. Capital expenditure across the region jumped from A$1.76 billion to A$2.11 billion, and net debt increased from A$3.50 billion to A$4.88 billion. Infratil's independent valuation of its half-share in CDC has climbed steadily, reaching A$9.2 billion in the June quarter just closed—a 23.6 percent increase in a single quarter. The company has guided for FY2027 operational earnings of A$680 to A$720 million, with expectations to exceed A$1 billion by FY2028, suggesting that despite the New Zealand loss, management sees significant growth ahead, though an insider indicated that major expansion, including a potential 55-megawatt contract with an unnamed US firm and a bid for a 500-megawatt slice of a 1.4-gigawatt Anthropic contract, will occur in Australia rather than New Zealand.
Notable Quotes
An insider indicated that major expansion, including a 55-megawatt contract and a bid for 500 megawatts of Anthropic capacity, will occur in Australia rather than New Zealand.— Source familiar with CDC's strategy
The Hearth Conversation Another angle on the story
How does a company report massive revenue growth and still lose nearly $90 million?
The loss isn't about the business failing to generate cash. CDC's core operations—selling data centre capacity—are profitable. The loss comes from three separate accounting events: the company revalued its properties downward by $145 million, the New Zealand dollar fell 8.5 percent against the Australian dollar creating a $46 million currency loss, and debt costs tripled because the company borrowed heavily to fund expansion.
Why did property values drop so sharply when the company is expanding?
That's the real question. A year earlier, CDC recorded a $588 million gain on the same properties. Now a $145 million loss. The company won't explain the methodology, but it suggests either the market for data centre real estate shifted, or the company's own valuation assumptions changed. Either way, it's a swing of over $730 million in a single year.
The debt tripled. That's aggressive. What's it being used for?
Capital expenditure on the facilities themselves. The company spent $203 million this year building and upgrading data centres. But the debt structure is unusual—nearly all of it flows through a financing entity created in February 2026 and owned by the Australian parent. It's a related-party arrangement that concentrates financial risk.
Is New Zealand still a priority for the company?
The numbers suggest otherwise. An insider told the Herald that major new contracts, including a potential 55-megawatt deal and a bid for 500 megawatts of Anthropic capacity, will all be built in Australia, not here. New Zealand has three facilities with 98 megawatts of capacity. Australia has over 700 megawatts either operating or under construction.
What about the staff and local economic impact?
The company employs roughly 75 to 100 people across two main sites in Auckland. It won't confirm the exact number. For a company with $2 billion in assets, that's a lean operation—data centres are capital-intensive, not labor-intensive. The real economic story is the land and infrastructure investment, not job creation.
Is this loss a sign of trouble?
Not necessarily. The parent company is guiding for A$680 to A$720 million in operational earnings next year, with expectations to top A$1 billion by 2028. The loss is largely non-cash—property write-downs and currency movements. The business is growing and expanding. But the New Zealand operation appears to be maturing while the company's growth engine shifts to Australia.