Having trouble finding a loan to finance your data center project? Try your construction company. Skanska has unveiled a new program to provide up to $1 billion in financing of data center construction projects. The program allows data center operators, who often finance purchases of servers and networking equipment through their vendors, to apply the same concept to data center construction.
SKanska's initiative, developed with Stonemont Financial Group, will offer financing to companies building data centers, who can then repay the capital at a fixed rate over lifetime of the facility under an operating lease structure. The funding partnership was announced Friday at the Datacenter Dynamics event in San Francisco.
The program seeks to address the impact of the capital crunch on data center construction. Many companies seeking to conserve cash have looked at colocation or wholesale data center options instead of building their own facility.
“We intend to give our clients access to 100% financing for developing an operating lease structure that is affordable and sustainable," said Jakob Carnemark, Senior Vice President at Skanska and leader of the firm’s Mission Critical Center of Excellence. "If you’re credit-worthy and the sustainability of your IT infrastructure is core to your business it doesn’t make sense to pay a large premium for what really amounts to off-balance-sheet financing based as much on your credit as the cost of the real estate. This is an ideal type of partnership.”
Skanska isn't the first data center developer to offer financing for client builds, as Digital Realty Trust has also offered this feature. But the program expands the realm of financing options available for data center, which are capital-intensive development projects. A number of public data center companies have postponed large projects, citing the economic environment and the scarcity of fresh capital.
Skanska said Stonemont Financial Group can make capital available in this environment through their relationships with pension funds and insurance companies who need to diversity their debt portfolios into real estate.
“With one of the strongest balance sheets of any construction company in the world, Skanska is the ideal partner for us to deliver extremely competitive financing on data center projects,” said Bob McMahon, Principal of Stonemont Financial. “Skanska’s ability to achieve lowest possible energy use in data centers they build combined with our ability to aggregate efficient capital means companies can renovate and/or expand their data centers at the lowest possible cost and have complete certainty of execution.”
“We partnered with the Stonemont team because of its long history of funding single-tenant lease transactions and their ability to deliver capital,” said Chris Strom, director of project development for Skanska. “This program plays an important role in reaching our goal of delivering network infrastructure to our clients that enables the most efficient utilization of capital and energy.”
The Skanska Stonemont partnership will fund projects that cost $20 million or more, and can also offer property management services as needed, and finance all IT equipment.