Virginia Data Center Lands $67M Refi
- Aug 28, 2019
Phillips Realty Capital has arranged $67 million in debt financing on behalf of Element Critical for a property located in Northern Virginia, the leading data center market in the world. Element Critical, a tailored data center and IT infrastructure services provider, will utilize the proceeds to refinance and improve the approximately 200,000-square-foot Tier III data center and office property at 7990 Quantum Drive in Vienna, Va.
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Phillips’ William Lawson, Adam Bieber and Harmon Handorf orchestrated the funding for Element Critical through EagleBank. “The market responded very positively to Element Critical’s financing request of Quantum Drive. A broad spectrum of capital sources provided financing solutions for the sponsor,” Lawson, a director with Phillips Realty Capital, told Commercial Property Executive. “However, EagleBank won the business by demonstrating the most sophistication around data center financing and structuring the most thoughtful loan that addressed the needs of the sponsor’s business plan.”
Element Critical’s business plan for 7990 Quantum, which features a tenant roster heavily weighted with publicly traded and investment-grade companies, centers on expansion. Developed on 14 acres in 1978, the property formerly known as Tysons Technology Center consists of an approximately 80,000-square-foot office structure and 200,000-square-foot data center that previously carried the respective addresses of 7980 and 7990 Science Applications Court.
Element Critical has been in possession of the Quantum complex since 2016, when the company’s owners, global principal investment firm Safanad and private equity firm Industry Capital, partnered as Safanad Industry Capital Internet Infrastructure LP to acquire the asset from The Meridian Group for $96 million. As part of an expansion endeavor that commenced soon after the acquisition, Element Critical will expand 7990 Quantum to ultimately encompass a total of 130,000 square feet of raised floor, including an additional 8 MW of critical power.
Data center financing
The capital markets are shifting for the data center sector, which is emerging from the weight of its status as a niche property type. “As the data center market continues to grow to meet consumer demand, the market has become significant enough for conventional lenders to take note and become interested,” Lawson said. Phillips, which structures debt and equity transactions across the commercial real estate industry, has been keeping busy in the data center market of late. “Phillips has solidified its data center expertise during the past year, having closed over $100 million in financings across the capital stack on behalf of sophisticated institutional clients,” he added. “Our data center pipeline remains robust.”