Legacy data centers only maintain infrastructure status if their leases get renewed, a sales imperative that may see competition from newer developments, says Shivek Ratnasamy, Director in charge of data centers, cloud and AI infrastructure at RBC Capital Markets.
In an interview with Cool Vector, Ratnasamy notes an emerging financial structure whereby data center operators are able to "ring-fence" their mature data centers and monetize the steady cash flows, freeing up capital to plough into new developments. The technique works well for developers, but for shareholders in the stabilized data centers, there are questions.
"Investors are concerned and saying, hey, you as an operator are selling me 80% of the stabilized portfolio, and you're continuing to develop other facilities," says Ratnasamy. "How can I be sure that when a lease comes up from a hyperscaler within the same geographic area that you'll be incented to sign a new lease in a stabilized pool versus your new development?"
Ratnasamy advises investors to insist on terms that incentivize operators to renew to maximize the revenue of existing data centers. " That's a mechanism to make sure you're actually going to try your best to get the lease renewed," says Ratnasamy.
Ratnasamy shares his insights in the Cool Vector episode, "RBC: To Monetize Data Centers, Investors are 'Ring-Fencing' Stabilized Assets," available in full on the Cool Vector YouTube channel:
Follow Cool Vector on LinkedIn: https://www.linkedin.com/company/cool-vector-media
#datacenters #datacenterconstruction #infrastructure #digitalinfrastructure #investing #hyperscaler
Share this post