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Stack Infrastructure to raise $250m for data center expansion

Stack Infrastructure is planning to raise $250m to expand its data center footprint.

The financing will be raised from the Stack Infrastructure Issuer, 2023-1, through the securitization of revenue tied to lease payments and electrical capacity at eight wholesale data centers in seven US states.

According to the pre-sale report from S&P Global Ratings, the data centers are located in Portland, Oregon; Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; San Jose, California; New Albany, Ohio; and Sterling, Virginia. The data centers have a total of 1.917 million sq ft and 138MW of capacity.

The equity extraction is anticipated to be completed by the third week of March.

All sites have a weighted average remaining contract term of 6.6 years and are financed with triple-net leases where the tenant is responsible for rent, taxes, insurance, and electricity expenses. The loan is anticipated to mature in five years, with a maximum of 25 years.

According to the report, Stack will use some of the money to repay a portion of the outstanding balance on the 2019-1 notes, the rest will be used for ‘other general corporate purposes,’ including increasing the company's data center footprint by financing turn-key and powered shell facilities.

The report states: “No new properties were added to the master trust since the series 2021-1 issuance. However, the aggregate appraisal value increased to approximately $2.62 billion for series 2023-1 from $2.13 billion for the series 2021-1 issuance due to increased constructed and leased capacity at the existing data centers, among other factors.”

Should the company’s three-month average amortization debt service coverage ratio (DSCR) levels reach 1.30x, a cash trap trigger will come into play.

This loan represents Stack Infrastructure’s fifth such from the master trust, and will share collateral with the existing 2019-1, 2019-2, 2020-1, and 2021-1 notes.

The 2019-1 series totaled $850m, with a second series 2019-2 seeing $225m raised. In its 2020-1 series the company raised another $325m in debt funding, and the 2021-1 series added another $400m. The combined total of these five rounds is $2.05bn.

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