Aligned Energy, a hyperscale data center developer and operator backed by Macquarie Infrastructure and Real Assets (MIRA), today announced the issuance of $1.35bn in securitized notes, via the first-ever green data center securitization. Specifically, these notes have been issued under Aligned’s Green Finance Framework, and externally analyzed by Sustainalytics, an ESG and corporate governance ratings firm.
Aligned Energy’s $1.35bn of securitized notes includes the following three classes:
- A-1 Variable Funding Note: $150m variable funding notes, with an investment grade rating of A- by S&P
- A-2: $1.05bn term notes, with an investment grade rating of A- by S&P
- B: $150m term notes, with an investment grade rating of BBB by S&P
Also, as part of today’s transaction, Aligned closed on an additional $375m sustainability-linked loan. Indeed, this deal brings the company’s incremental sustainable debt financings to $1.725bn.
Collateral of the Securitized Notes – Aligned Energy
Aligned Energy’s $1.35bn asset-backed securitization is collateralized by four completed and operating wholesale data center campuses located in Phoenix, Arizona; Ashburn, Virginia; Salt Lake City, Utah; and Dallas, Texas. Additionally, the future cash flow from Aligned Energy’s Salt Lake City, Utah campus expansion will be included in the securitization.
Overall, these facilities have an aggregate appraised value of ~$1.77bn, implying a ~75% loan-to-value (LTV) ratio. The data centers comprise 141 megawatts of built power capacity across 1.5 million sqft of gross data center space. Of this total built power capacity, Aligned Energy has leased 125 megawatts, equivalent to 89% occupancy. In turn, the data centers produce annualized adjusted base rent (AABR) of $133m.
Additionally, highlights of Aligned Energy’s collateral include:
- Lease Rate: $87 per kW per month (modified gross leases)
- Lease Term: weighted average remaining lease term of 5.4 years, which is relatively short for hyperscale data center portfolios. Notably, Aligned Energy’s weighted average original lease term was also short, at only 7.0 years
- Credit Quality: 57% of tenants are investment-grade, or equivalent
- Tenant Concentration: 45% of contract value and 31% of total annualized adjusted base rent (AABR) is attributable to one BBB+ rated tenant
- Customers: cloud service providers (44% of AABR), technology (29% of AABR), and financial services (14% of AABR)
Sustainability-Linked Financing – Aligned Energy
Aligned’s sustainability-linked financings are tied to the company’s core environmental, social, and governance (ESG) objectives, and Key Performance Indicators (KPIs), including:
- Matching 100% of Aligned’s annual energy consumption to zero-carbon renewable energy by 2024
- ESG reporting under a global standard
- Reporting on a Total Recordable Incident Rate (TRIR) for workplace safety
Green Finance Framework
Aligned Energy’s Green Finance Framework is used to govern the issuance of Green Finance Instruments, including green bonds, green loans, green asset-backed securities (ABS), and green tranches of ABS. Specifically, this framework provides a structure for i) use of proceeds, ii) process for project evaluation and selection, iii) management of proceeds, and iv) reporting.
Use of Proceeds – Aligned Energy
Aligned Energy will use a portion of its green data center securitization proceeds to refinance ~$1.0bn of existing credit facilities. Additionally, the company will direct proceeds from the securitization towards the growth of its data center portfolio. To this end, Aligned Energy will acquire land parcels in the United States and international markets for new builds and expand its existing data center campuses. For example, Salt Lake City, Utah, is a market where the company is growing:
Salt Lake City (SLC-04) – Expansion
In early August 2021, Aligned Energy announced that it had acquired a new “multi-megawatt site” in Salt Lake City, Utah for the expansion of its campus. Specifically, the facility known as SLC-04 will have a 6-month construction timeline, with completion set for December 2021.
Transaction Advisors – Securitized Notes
Aligned Energy’s $1.35bn green data center securitization involved the following financial institutions:
- Structuring Advisor, Joint Active Bookrunning Manager: Guggenheim Securities
- Joint Active Bookrunning Manager: Deutsche Bank, Goldman Sachs, and Wells Fargo
- Co-Manager: ING (Sustainability Agent), Citi, Citizens Bank, Nomura, and TD Securities
Data Center Securitizations – Competitors
Since 2020, a number of notable U.S. hyperscale data center operators have used debt securitizations to secure long-term financing at attractive rates. Precisely, these companies include Sabey Data Centers, Compass Datacenters, STACK Infrastructure, and Vantage Data Centers. These operators have used debt securitizations to both refinance their existing credit facilities and fund extensive data center development pipelines.