Serverfarm Eyes $589M Loan
Three recently upgraded data centers will back the notes.
Serverfarm is seeking to secure a $589 million ABS financing package backed by three of its data centers, according to an S&P Global presale report. The agreement is expected to close on November 20.
Morgan Stanley will arrange the financing, issued by Wilmington Trust, while Trimont will be the servicer.
The deal includes a $543 million senior note and a $46 million loan, both with an anticipated repayment date of five years and a 30-year maturity date.
The company’s data centers are in Los Angeles, Chicago and Atlanta. The owner will use the funds to repay part of existing debt.
READ ALSO: Are Your Data Centers Ready for the Future?
The facilities have a total capacity of 50 megawatts—fully leased, with in-place rents at market rate—while their combined value was appraised at $808 million, the same report shows. All three data centers were renovated within the past three years.
LAX1 is a 117,500-square-foot property in El Segundo, Calif., with 17.3 megawatts of capacity. It features N+1 hybrid air handlers cooling systems and is connected to Tier 1 and dark fiber providers. Serverfarm acquired it for $71 million from T5 Data Centers back in 2021, which marked its entry in the Los Angeles market.
CH1 is an eight-story, 443,000-square-foot data center in Chicago. It has 32 megawatts of power, water-cooled chiller plant systems and utility power provided through 12 feeds originating from four separate substations.
The Atlanta data center, or ATL1, is in Suwanee, Ga. Totaling 153,000 square feet and 12 megawatts of capacity, the property includes air handlers with pumped refrigerant economization cooling systems. It provides connections to more than 7,000 miles of fiber in the Atlanta metro area, as well as Dallas, Miami and Washington, D.C.
In May 2023, Manulife Investment Management, on behalf of its Manulife Infrastructure Fund II and affiliates, entered into a definitive purchase agreement to acquire the majority interest in Serverfarm. The strategic transaction was designed to push the data center owner and operator’s global expansion. In September of the same year, the transaction was completed.
Last year, Serverfarm acquired two campuses in Houston, marking its entry into the Texas market. The purchase was funded through equity commitments provided by Manulife, along with minority shareholders. This enabled the company to expand its colocation capabilities by 500 megawatts.
Data centers, an investor powerhouse
AI data center REITs saw a significant increase in performance last year that is still going strong today. After the Stargate Initiative, unveiled by the White House at the start of this year, investor activity ramped up even more, as multiple already active players increased their capital commitments.
One recent example is the $40 billion deal involving Aligned Data Centers, which is currently owned by Macquarie Asset Management. The Artificial Intelligence Infrastructure Partnership, a consortium of investors including Microsoft and NVIDIA, among others, is seeking to purchase all equity in the data center operator by the first half of next year.
In September, Blackstone-owned QTS Realty Trust was looking to close a $599.8 million ABS financing package backed by its Phoenix data center project. The facility is part of QTS’ multi-building campus currently under construction, set to comprise 210 megawatts of capacity.
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