Vantage Data Centers, a US-based company, has made history in Europe by acquiring 720 million euros ($ 820 million ) in a pioneering financing agreement, the first ever euro-denominated asset-backed securitization ( ABS ) transaction related to data centers on the continent.
The money will be used to pay off four hyperscale information centers, which are located in Frankfurt and Berlin, with development loans. These facilities, which supply 64 megawatts of strength, are completely leased to big AI- and cloud-focused businesses, guaranteeing steady long-term revenue.
This action highlights the growing need for data centre system, particularly as technology companies become more and more advanced with their demands for AI and cloud computing. An ABS agreement allows businesses to borrow money using their natural assets and future earnings as collateral, unlike traditional loans.
According to Vantage’s Chief Financial Officer, Sharif Metwalli,” we think the ABS business in certain is kind of best suited for our type of property, which is largely true estate-centric, high record quality tenants, longer term leases, which is almost ideal for the ABS investor.”
Despite having a lot of leverage, there was a lot of buyer interest. ” This deal was actually very heavily leveraged, to be honest, but we were essentially two and four days oversubscribed on the respective financings,” said Rich Cosgray, senior vice president of Vantage’s global capital markets.
Powerful investor confidence
The data centres were just valued at$ 1 billion by Scope Ratings, which gave the bonds A and BBB ratings, which indicated strong and solid credit scores, both.
This financing is Vantage’s following significant ABS exchange in Europe. The company raised$ 600 million last year using a model comparable to that of its UK campus in Cardiff, which has 148 megawatts of capacity.
For its European operations, the company has now raised a total of € 2.2 billion ($ 2.51 billion ) in debt financing. Vantage has distributed approximately$ 7.5 billion in ABS across nine purchases worldwide.
According to Cosgray,” The release of the first ABS in the data center market marks a major breakthrough in online facilities financing,” according to Cosgray, as quoted by Data Center Dynamics. Vantage continues to show how creative we are with money markets and how we can find innovative funding sources to power our international expansion.
Deutsche Bank and Barclays Bank served as shared direct administrators in the transaction. A European rules company called Clifford Chance provided legal counsel. Given the size and level of the underlying assets, the bond is scheduled to have an average coupon of 4.3 %, which many in the market find attractive.
In 2025, the European data center market is projected to grow by 20 %, fueled by growing demand in cities like Frankfurt, London, and Amsterdam. The most recent transaction from Vantage demonstrates how well-known investors are in Europe for information centers as a worthwhile asset class.
