It’s a significant step for the market in Europe, where only two data center ABS deals have been publicly syndicated so far, both by Vantage Data Centers, to support campuses in Wales and Germany. This type of securitization, which allows investors to buy bond tranches of varying risk backed by data center leases, is already a key financing tool in the US, with issuance topping $15 billion last year, according to data compiled by Bloomberg.
“I expect quite a few deals in the next 12 to 18 months in Europe,” said Elisabeth Johnson, a partner at law firm Linklaters LLP who specializes in infrastructure finance. “The scale of capex and refinancing that is needed in this space is such that the capital markets will likely have to play a role.”
The offerings are coming as the region strives to catch up with the US and China in building data centers, which house the computer and storage systems needed to power AI. European leaders have pledged to make significant investments in AI and data centers, but the region’s stricter regulatory climate and the enormous energy and water demands of the facilities have slowed progress.
At the development stage, operators are usually able to access funds from banks or project finance. Securitization comes in once facilities are operational, with the deals typically backed by leases from the end user – big tech firms like Meta Platforms and Microsoft Corporation.
In Europe, data centers have been particularly concentrated around Frankfurt, London, Amsterdam, Paris and Dublin. They are often run by large US operators – such as CyrusOne, Stack Infrastructure and EdgeConneX – which have already used securitization extensively in the US.
