London-based data centre business AtlasEdge has raised €725 million in debt from a syndicate of banks for a cross-border expansion strategy expected to involve significant investment.
ING Bank was lead arranger on the loan, working alongside ABN Amro, Credit Agricole CIB, Scotiabank, NatWest, Banco Santander and UniCredit Bank.
The finance is expected to provide AtlasEdge with €525 million in committed debt and an additional €200 million uncommitted accordion facility, allowing it to increase borrowings over the course of the seven-year loan without the need to agree new facility agreements.
The debt is the first issued to the business since it was established in September 2021. Ron Huisman, chief financial officer at AtlasEdge, explained to Real Estate Capital Europe it would likely be followed by further borrowing in the future.
“This is a great starting point for us,” he said. “Now we have finance to execute our plan and the management ambitions are even higher. The faster, and smarter, we spend this, the more successful we are. I hope to see us quite quickly back in the market.
“We know this group of banks is very interested in joining us on our growth journey. It is a seven-year facility, but we expect we will be talking to [these lenders again] earlier than that about further finance.
“This loan is an interesting mix of concepts in that there is a tranche that enables us to buy greenfield land and there is a tranche dedicated to help us grow our presence through corporate acquisitions. It also allows us to invest in upgrading some sites we already have in our portfolio.”
Across ownerships and leases, AtlasEdge is present in more than 100 locations, including London, Madrid, Milan, Paris and Copenhagen. The firm is targeting further growth in Germany, the UK and in Spain. Since its formation, it has acquired 12 sites across Europe, including four centres in Stuttgart, Dusseldorf and Leverkusen; as well as sites Leeds, Bristol and Manchester in the UK.
Proximity is prized
The business specialises in so-called ‘edge data centres’, facilities positioned close to where data is used in order that information can be processed as quickly as possible. A typical edge data centre customer includes platforms, enterprises and network providers – cohorts that are growing their demand for closer proximity to their end users. Smart factories that rely on robotics for inventory management, or companies that provide real time traffic data analysis are examples of these.
Some data businesses in AtlasEdge’s portfolio have leases of around 20 to 25 years.
The value of the loan was underwritten against the value of the business rather than that of the assets in AtlasEdge’s portfolio, in line with how many infrastructure loans are issued, Huisman explained. “We wanted to stay away from loan-to-value based financing. The value of the business is much bigger than the value of our real estate portfolio. So we can generate a lot of long-term committed cashflow, so that gives lenders confidence in our ability to service the debt.”
Real estate adviser JLL identified edge data centres as one of the fastest growing parts of the data centre sector owing to the proliferation of mobile phones and use of online applications, according to its Data Centres 2023 Global Outlook.