"Are data centers the new REIT? Not quite - but Meta's new mega-data center in northeast Louisiana marks what one expert calls a "decisive shift" in how hyperscalers finance the AI era: by turning data centers into a new investable asset class. "This is where capital markets meet compute," said Sean McDevitt, a partner at management consulting firm Arthur D. Little, which provided commercial due diligence advice to Meta."
"Traditionally, tech giants like Meta, Google, and Microsoft have funded their data center buildouts directly. This time, Meta is partnering with Blue Owl Capital, a private-credit investment firm, on the $27 billion data center known as Hyperion. As reported by The Wall Street Journal, Blue Owl owns 80% of the project, while Meta holds 20%, operating and leasing the facility long-term. BlackRock bought more than $3 billion of bonds that the joint venture (dubbed Beignet) issued last week to finance the project, in a sale arranged by Morgan Stanley."
"The deal stands out for its scale-the largest private-debt offering ever-and for its A+ rating from S&P, which reflects Meta's backing of the project (albeit with just a single agency rating). Yet the debt had a yield of 6.58% at issue, a level closer to high-yield, or "junk," bond territory. That structure allows Meta to build its data center without putting the full $27 billion of debt on its own balance sheet. The approach-known as a special-purpose vehicle (SPV) or off-balance-sheet financing-is largely new territory for hyperscale infrastructure."
Meta and Blue Owl Capital formed a joint venture to finance the $27 billion Hyperion data center in northeast Louisiana, with Blue Owl owning 80% and Meta holding 20% to operate and lease the facility long-term. BlackRock purchased over $3 billion of bonds issued by the joint venture, in a Morgan Stanley-arranged sale, making it the largest private-debt offering ever. S&P assigned an A+ rating reflecting Meta's backing, while the bonds yielded 6.58%, nearer high-yield territory. The financing used a special-purpose vehicle to keep debt off Meta's balance sheet, signaling a shift toward investable hyperscale infrastructure.
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