U.S. data center operator Vantage Data Centers has secured €720 million ($821.4 million) in Europe’s first euro-denominated asset-backed securitization (ABS) deal involving data center assets, the company announced Tuesday.
The transaction, backed by four of Vantage’s German facilities—two in Berlin and two in Frankfurt—marks a milestone in European data center financing. The bonds issued carry an average coupon rate of 4.3%.
In an ABS deal, a company raises capital by using its infrastructure and future revenue as collateral. Vantage said the proceeds will primarily repay existing construction loans tied to the facilities.
“We believe the ABS market is particularly well-suited for our asset type—real estate-centric, high-credit-quality tenants, and long-term leases—making it nearly ideal for ABS investors,” said Sharif Metwalli, Vantage’s chief financial officer, in an interview with CNBC.
Despite the high leverage of the deal, investor demand surpassed the amount raised, with the offering being two to four times oversubscribed, according to Rich Cosgray, Vantage’s senior vice president of global capital markets.
“This transaction was highly levered, more so than our prior one, which gave some investors pause,” Cosgray told CNBC. “Yet, we still saw strong demand and were able to tighten pricing significantly during the marketing process.”
The four facilities, valued at over $1 billion earlier this year, provide approximately 55 megawatts of power and are fully leased to hyperscale clients, the company said.
Last year, Vantage pioneered another industry first with a £600 million securitization backed by two data centers in Cardiff, Wales, part of its broader expansion in Europe, the Middle East, and Africa (EMEA). The company currently has 2,500 megawatts of data center capacity either operational or in development across the region.
Barclays Bank and Deutsche Bank acted as joint lead managers for the latest deal, with Clifford Chance serving as legal counsel to Vantage.