Developer Sabey Data Centers has lined up $800 million in funding, using securitized notes to arrange low-cost capital for continued expansion of the company’s U.S. data center campuses.
Sabey operates more than 3 million square feet of mission-critical space, making it one of the largest privately-held multi-tenant data center operators in the United States. The Seattle-based builder has campuses in Northern Virginia (Ashburn), Manhattan and three sites across the Pacific Northwest. The company is in expansion mode, adding capacity across its footprint.
The transaction used an asset-backed securitization (ABS) platform from Guggenheim, and the notes earned an investment grade A+ rating from Standard & Poor’s.
In a securitization financing, a company creates a security based on the creditworthiness of a specific pool of assets, rather than the entire company. Data center developers can issue debt notes backed by cash flow from operational data centers, which are leased by some of the world’s largest and most credit-worthy companies. That tenant credit quality enables the issuer to pay lower interest rates on its debt, which reduces its costs as it seeks to compete and build additional facilities.
Robert Rockwood, the President of Sabey Data Centers, said the financing was a significant win for the company.
“It provides low-cost, fixed-rate debt and a long-term capital structure to support future growth,” said Rockwood. “In essence, this facility will give us the capacity to double our size on existing campuses that we control. In addition, we continue to unlock our potential to offer low-cost, renewable energy to our customers.”
Raising Capital In A Challenging Environment
Sabey Corp. has more than 25 years of experience in the data center business and is one of the largest operators of hydro-powered facilities in the United States. The company initially focused on commercial development, including office and industrial space for major Seattle corporations like Boeing and Starbucks. Sabey then diversified into data center real estate, as well as technical facilities for life sciences and healthcare.
“In essence, this facility will give us the capacity to double our size on existing campuses that we control.”
Robert Rockwood, Sabey Data Centers
Sabey has recently been expanding its campuses in Ashburn and Quincy, Washington. The financing announced today will support ongoing development, and will refinance the company’s existing credit facility with TD Securities, according to Patty Sewell, the Chief Financial Officer of Sabey Corporation.
Sewell also noted that this was accomplished during a challenging financial environment amid the COVID-19 pandemic, calling it “a testament to the strength of Sabey’s assets, team and story.”
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“I applaud Guggenheim Securities for its extraordinarily thoughtful execution of this transaction, the first 144A non-traditional new issue ABS deal since the markets effectively closed on March 11th due to the COVID-19 pandemic,” said Sewell.
Sabey is the third data center provider to use securitization financing, following Vantage Data Centers and STACK Infrastructure. Both those issues received an A- rating from credit agencies.
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