Vantage Data Centers has issued another £254 million of notes collateralised by two data centres in Newport in South Wales, taking the total commercial mortgage-backed securitisation to £854 million.
The transaction – Vantage Data Centers Jersey Borrower SPV Limited launched as an initial £600 million class A-2 fixed-rate note security in May of last year. The launch was the first of its kind in Europe.
The CMBS is backed by the leasehold and fee-simple interests in two data centres in Newport, Wales, owned and operated by Vantage. The company is also the issuer of the CMBS. The servicer is JLL and the structuring adviser is Barclays Bank, with Barclays Bank and SMBC Bank International joint lead arrangers.
The two operating wholesale data centres in Newport, South Wales had an aggregate value of £1.095 billion.
Vantage Data Centers Jersey Borrower SPV has now issued £200 million of Class A-2 notes and £54 million of B notes with DBRS Morningstar acting as ratings agent. The data centres together account for 110,420 kiloWatt in total leased capacity.
The total debt of £854 million represents a 76.4% loan to value on the Morningstar DBRS value of £1.1183 billion.
Total proceeds from the sale of the £200 million and £54 million term notes will be used to redeem the Class A-1 Variable Funding notes and refinance existing debt in the bridging loan of £75 million and intercompany debt of £39.2 million for the acquisition of the freehold interest in the land. It will return equity to the investors of £49.8 million.
Data centre ratings
Data centres are an intriguing new asset-backed security for valuers to rate. DBRS views data centres as real estate as the properties are large warehouse-like facilities housing large servers and other technical infrastructure for a wide variety of tenants and users. However, unlike typical commercial property leases where tenants lease space by the square foot, data centre tenants lease power capacity from the operator. Power is typically measured in kW or MW, with 1 MW, enough to power approximately 650 homes.
In most cases, the landlord provides the space, the power distribution units, the utility power supply, cooling and backup power supply, according to DBRS. The tenant is generally responsible for their own servers, data storage and other equipment that is housed in racks or access-controlled cages on the data centre floor. The value of the on-site server and storage equipment owned by the tenants can be many times the value of the landlord's building infrastructure.
Connectivity is key to keep the servers running. Valuers will look at power supply and backup generators. They will also pay close attention to the likelihood of natural disasters, such as flooding.