Data Centre Infrastructure Finance
Manchester
£28M facility for construction and fit-out of purpose-built 3MW data centre in Manchester. Combined senior debt and mezzanine structure with 15-year pre-let to major cloud provider.
The Challenge
Technology infrastructure company needed £28M to develop purpose-built 3MW data centre on acquired site in Manchester. Project had 15-year pre-let commitment from major cloud computing provider (£2.8M annual rent) but required specialist mechanical and electrical infrastructure including N+1 redundant power, advanced cooling systems, and extensive security. Traditional project finance lenders concerned about technology obsolescence risk and sector concentration despite strong covenant tenant.
Our Solution
Structured two-tier capital stack: £21M senior debt (75% of cost) from specialist infrastructure lender comfortable with data centre sector, secured by first charge over property and fixed plant. £7M mezzanine layer from technology-focused credit fund, secured by second charge. Senior debt priced at 6.2% with 15-year fully amortizing structure matching lease term. Mezzanine at 11.5% with profit share participation above 15% IRR. Coordinated technical due diligence including independent engineering review of M&E specifications and energy efficiency.
The Result
Full funding approved in 7 weeks enabling construction commencement. Development completed 2 months ahead of 18-month schedule due to modular construction approach. Data centre operational since Q3 2024, tenant occupying full capacity. Rent cover of 1.6x on senior debt providing strong security. Facility achieved investment grade rating based on tenant covenant (AWS) and long lease term. Developer refinanced to institutional debt at 4.8% after 12 months operating history, crystallizing equity value and funding expansion of portfolio with two additional data centre developments.
Key Takeaways
- Specialized lender expertise in project finance was critical to success
- Completed in 7 weeks from initial consultation to funding
- Total facility size of £28M structured to meet client needs
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