Vantage Data Centers is testing appetite from structured credit investors in a £600 mln issuance of CMBS bonds, a first for the data centre sector.
The securitised debt is secured on two south Welsh data centres located in Newport's Celtic Lakes, near Cardiff, with the Welsh government holding a long lease on one of the two.
The issue will pay an indicative fixed coupon of 6.7% and has been provisionally rated A by rating agency DBRS Ratings (Morningstar DBRS).
Earlier this year, PropertyEU reported Morningstar DBRS's head of European structured finance, Christian Aufsatz, saying: 'Data centres is an asset class which has seen a lot of issuance in the US and I expect to see it in Europe soon.'
The Welsh centres are known as CWL 11 and CWL 13 and together they account for almost 112 MW of power.
The Welsh Ministers has a long lease on the older, multi-let CWL 11 for a remaining term of approximately 111 years while CWL 13 is held freehold and was constructed in 2022 as a purpose-built data centre for a single hyperscaler.
This hyperscaler is also one of two which leases space in CWL 11 and together the two hyperscalers account for 85% of the rent and 91.0% of total leased capacity at the entire collateral including booked-but-not billed (BBnB) capacity that will be coming online in 2024 and 2025. BBnB capacity represents capacity that has been leased but is not yet ready for service.
Barclays Bank and Japan's SMBC London branch are the banks involved. The £600 mln raised will be used to refinance an existing loan of £480 mln and fund upfront reserves of £54 mln. The remaining £66 mln will go towards closing costs and capex or development in Vantage's portfolio.
Jones Lang Lasalle Services is the servicer.
Morningstar DBRE estimates the deal's LTV to be 69.2% based on the £600 mln of debt and its own valuation which is 21% lower than the market valuation of £1.1 bn provided by Knight Frank in January 2024 (54.8%).
The rating agency's year 1 net cashflow is £42.7 mln from the two properties, representing a debt yield of 7.1%.
The 15-year term notes have an initial 5-year period of 10 payments until the anticipated repayment date. After the ARD, and until maturity, any excess cashflow will be used to amortise the outstanding principal balance.
Another attraction to the CMBS's potential investors is that the properties run on 100% renewably sourced power.
Vantage, which has 34 campuses in 19 international markets, was acquired by DigitalBridge, a global digital infrastructure firm.
