Dealmaker: Phillips Realty Capital Structures $67M for Data Center

Phillips Realty Capital, Bethesda, Md., arranged $67 million to refinance and improve a 199,000-square-foot Tier III data center and office building in Vienna, Va.

EagleBank, Bethesda, Md., lent the dunds to data center firm Element Critical and its sponsors, Safanad and Industry Capital.

Phillips Realty Capital Director William Lawson, Managing Director Adam Bieber and Underwriting Director Harmon Handorf structured the debt financing. EagleBank Senior Vice President of Commercial Real Estate Bryan Leigh represented the bank.

Located at 7990 Quantum Drive, Element Critical’s Northern Virginia facility was built in 1978 and acquired by Safanad Industry Capital Internet Infrastructure LP in 2016 from The Meridian Group.

The property is predominately leased by publicly traded investment-grade tenants. After a renovation it will total nearly 130,000 square feet of raised floor, including an 8 MW expansion of critical power.

Data centers are benchmarked in megawatts of electricity consumed. A megawatt powers 4,000 servers. CBRE reported northern Virginia is the country’s most active data center market, with 126 megawatts absorbed in first-half 2019. Houston, the second-most active market, absorbed 14.4 MW in the same period.

“The capital markets for data center financing are rapidly evolving with more traditional and conventional lenders starting to invest in the space,” Lawson said.

Leigh called EagleBank very optimistic about the data center market and this asset in particular. “We’re committed to deploying more capital into this space,” he said.