Vantage Raises $820M for European Data Centers

Vantage, a U.S. data center operator, has secured 720 million euros ($821.4 million) through an asset-backed securitization (ABS) deal—the first of its kind in Europe. This euro-denominated deal involves four data centers located in Germany.

The company stated it will pay an average coupon of 4.3% on the bonds issued. ABS deals enable companies to raise funds using data center infrastructure and future revenues as collateral. Vantage intends to use the funds to repay existing construction loans for these facilities.

Sharif Metwalli, CFO of Vantage Data Centers, said that the ABS market suits their real estate-centric assets with high-credit-quality tenants and long-term leases. Vantage also noted that investor demand exceeded the amount raised, despite the large sum borrowed.

Rich Cosgray, senior vice president of global capital markets at Vantage Data Centers, mentioned that the transaction was highly levered, potentially making some investors uncomfortable. However, the financings were oversubscribed, allowing for tighter pricing.

The four data centers, with two in Berlin and two in Frankfurt, provide around 64 megawatts of power and are fully leased to hyperscale customers. Scope Ratings valued the data centers at approximately $1 billion earlier in the year. The credit rating agency rated two notes issued by the company, worth 590 million euros and 50 million euros, as A-rated and BBB-rated, respectively.

Vantage has issued around $7.5 billion in asset-backed securities globally across nine transactions. Investors in the euro-ABS deal are believed to include insurance companies, pension funds, and fund managers. Last year, Vantage raised £600 million through the first securitization of a data center in Europe, the Middle East, and Africa (EMEA), involving two units from its Cardiff campus with 148 megawatts of electricity power. Across the region, the company has 2,500 megawatts of data center capacity either operational or under development.

The European data center market is expected to grow, with increased demand driven by Big Tech firms scaling up their AI usage. CBRE forecasts a 20% growth in the European data center market in 2025. Frankfurt, London, Amsterdam, Paris, and Dublin show the biggest demand, and the need for dispersed facilities is growing construction in tier-two markets.

Morningstar DBRS noted that the securitization of European data centers is an emerging asset type, unlike in the U.S. Metwalli stated investors are becoming more comfortable with this asset in EMEA, citing the outsized demand for their 720 million euros issuance.

Barclays Bank and Deutsche Bank led the transaction as joint lead managers, and Vantage was represented by Clifford Chance.