Trading green for green, data center provider Aligned has closed on a $1 billion credit facility, reportedly the first U.S. data center financing linked to sustainability goals.
Reportedly one of the largest private debt raises in data center history, the facility consists of a $650 million term loan, a $100 million delayed-draw term loan and a $250 million revolving credit facility.
Aligned engaged TD Securities as the administrative and collateral agent, Goldman Sachs Lending Partners LLC as the syndication agent, and ING Capital LLC as the sustainability structuring agent. TD Securities; Goldman Sachs Bank USA; Citizens Bank N.A.; Deutsche Bank AG, New York Branch; and Nomura Securities International Inc. served as joint bookrunners and joint lead arrangers for the facility.
The sustainability-linked financing is tied to Aligned’s core ESG (environmental, social and governance) objectives and Key Performance Indicators, including:
- A commitment to match 100 percent of Aligned’s annual energy consumption to zero-carbon renewable energy by 2024.
- Transparency and continuous improvement across sustainability best practices.
- A commitment to having/reporting on an industry-leading Total Recordable Incident Rate.
Big money, big goals
Aligned CEO Andrew Schaap told Commercial Property Executive that what makes this financing sustainability-linked is that “a component of the interest rates on this credit facility is directly tied to our ESG objectives. If we deliver on our commitments and perform well on our renewable energy, sustainability reporting and safety KPIs tied to the financing, we benefit from discounted interest rates; if we don’t, the rates either stay the same or go up (depending on the actual performance).”
Because Aligned is a private company, CFO Anubhav Raj explained, Aligned doesn’t disclose what exactly their financing will be used for. That said, he continued, “we can conservatively say that approximately $750 million will be used to refinance existing debt and deliver on current contracts. The rest will be used for further expansion, in both U.S. and international markets.” Raj added that the term of the facility, inclusive of extension options, is five years.
Aligned has been popular with lenders this year. In May, the company increased its credit facility to $575 million, while also expanding its team of lenders.
Because of their crucial role in supporting businesses, data centers have been one of the commercial real estate asset types least affected by the COVID-19 pandemic, according to a first-half 2020 report from CBRE.
Wholesale data centers in the primary U.S. markets of Northern Virginia, Dallas, Silicon Valley, Chicago, Phoenix, metro New York and Atlanta saw net absorption of 134.9 MW in the first half. Of the more than 373 MW of capacity under construction in primary markets in the first half, 239 MW was in Northern Virginia, also according to CBRE.