Meta Pushes Boundaries With $3B Data Center Loan
Meta and EdgeConneX are pursuing an ambitious, first-of-its-kind financing deal—nearly $3 billion in loans to fund both a new data center and a dedicated off-grid natural gas power plant. The dual construction effort, backed by Meta, blends digital infrastructure with energy generation in a way few projects have attempted before, according to the Financial Times.
Meta is reportedly partnering with data center operator EdgeConneX, which was acquired by EQT roughly a year before the investment firm shuttered its multifamily fund and shifted its focus to the industrial sector. The FT cited an unnamed source familiar with the deal who described the lending arrangement as "more complicated."
"Like, you're underwriting two very different types of assets at once," the person said.
An investor who received a pitch for the project told the FT the structure must account for risks from combining two asset classes—the data center and its power supply. Another investor expressed confidence given EdgeConneX's experience, expertise and proven track record in large data center projects.
The proposed deal's terms reflect its complexity. The financing would pay 250 basis points above SOFR, which the FT noted as "slightly higher" than comparable big-tech-backed projects due to the added risks. The debt is being syndicated to banks and large institutional investors and is expected to close within weeks.
Because Meta has signed a lease agreement for the facility, the debt is likely to receive a private investment-grade rating, enabling broader distribution among investors.
Although layering a power plant onto a data center project increases complexity, it also solves one of the industry's biggest headaches: timely power delivery. Traditional utility connections can take years, particularly when new substations are required. Energy availability has increasingly driven site selection decisions for data centers, GlobeSt.com has reported.
That urgency has been complicated by "phantom data centers"—developers reserving capacity with multiple utilities to keep options open —throwing regional energy planning into disarray. An on-site plant could eliminate those delays and give developers tighter control over construction schedules.
Speed matters more than ever. Data centers once operated for a decade or longer before needing upgrades. Now, rapid advances in AI computing have reduced effective lifespans to five to seven years. Getting a facility live—and profitable—faster can make or break its economics.
Source: GlobeSt/ALM