Data Centers & Digital Infrastructure
Power, land, and capital — in that order.
Digital infrastructure combines real estate development, utility constraints, and long-term contracted revenue.
How capital moves through digital infrastructure
Power, land, and development risk
Power availability now determines which projects proceed.
Read more: Power, land, and development risk
Data center development begins with securing land, power capacity, fiber connectivity, and permits. Power has become the scarcest input in many markets, with utility interconnection timelines extending years. Developers spend significant capital on deposits, engineering, and site preparation before construction financing is available. Projects that cannot secure power on schedule may be delayed or abandoned, leaving sunk costs. Site selection therefore starts with power.
Leasing and contracted revenue
Long-term leases with creditworthy tenants support financing.
Read more: Leasing and contracted revenue
Wholesale data centers lease capacity to hyperscale and enterprise tenants under long-term agreements, often with pre-leasing before construction. Colocation operators sell space and power to many smaller customers on shorter contracts. Lease term, tenant credit, and pricing per megawatt determine financeability. Strong pre-leasing reduces risk and supports more favorable construction and permanent financing terms. Weaker pre-leasing usually means tighter terms and more equity.
Construction and stabilized financing
Projects move from construction loans to long-term infrastructure capital.
Read more: Construction and stabilized financing
Construction is typically financed with development equity and construction loans, often requiring pre-leasing or sponsor guarantees. After stabilization, assets may be refinanced with long-term debt, securitizations, or infrastructure equity sized to contracted cash flows. Interest rates, construction cost, and lease-up timing affect returns. Each financing stage has different requirements and terms that vary by lender and project. Gaps between stages create risk.
Operating economics and efficiency
Power cost, cooling efficiency, and utilization shape margin.
Read more: Operating economics and efficiency
Once operating, data centers incur power, cooling, maintenance, and staffing costs. Power may be passed through to tenants or bundled into pricing, affecting margin exposure. Cooling efficiency and utilization determine operating cost per unit of capacity. Equipment replacement and technology changes, such as higher-density computing, require ongoing capital investment to remain competitive. Power pass-through terms therefore matter considerably, and margin exposure should be modeled under several pricing scenarios.
Where data center developers and operators feel pressure
Power interconnection delays
Utility timelines can push projects back by years.
Read more: Power interconnection delays
Interconnection queues and transmission constraints delay energization, extending development periods and carrying costs. Deposits and site holding costs accumulate. Developers need schedule-sensitive financial models and contingency plans, including alternative power solutions where feasible, to protect capital at risk.
Construction cost escalation
Equipment and labor costs can exceed budgets.
Read more: Construction cost escalation
Electrical gear, generators, cooling equipment, and specialized labor are in high demand, with long lead times and rising prices. Cost overruns reduce returns and may require additional equity. Early procurement and contract structures that allocate escalation risk clearly help protect budgets.
Pre-leasing and tenant concentration
Reliance on a few large tenants concentrates risk.
Read more: Pre-leasing and tenant concentration
Hyperscale tenants provide scale and credit quality but negotiate aggressively and may represent a large share of revenue. Delayed tenant commitments can stall financing. Diversifying tenants or securing strong lease protections reduces concentration risk and supports refinancing.
Financing across project stages
Each stage requires different capital and documentation.
Read more: Financing across project stages
Moving from development equity to construction loans to permanent financing requires coordinated planning, consistent reporting, and timely satisfaction of conditions. Gaps between stages can strain liquidity. A detailed sources-and-uses schedule identifies these gaps early. Bridge needs and timing differences can then be addressed with lenders and investors well in advance.
Technology change and density
Higher-density computing requires facility upgrades.
Read more: Technology change and density
AI and high-performance computing increase power density and cooling requirements. Older facilities may need substantial investment to remain competitive. Capital planning should consider technology trends and the cost of retrofits versus new development. Retrofit cost can rival new construction, so each option deserves careful comparison against realistic tenant demand.
Operational and reporting complexity
Multiple projects and entities strain finance teams.
Read more: Operational and reporting complexity
Developers often manage many project entities with separate financing, investors, and reporting obligations. Lean finance teams struggle with timely close, lender reporting, and investor communication. Standardized processes reduce errors and support growth. Scaling the team without standard processes rarely works, and errors become expensive as the portfolio grows.
Advisory for power-constrained, capital-heavy assets
Capital Structure & Financing
Development, construction, and stabilized financing analysis as sponsor or borrower.
Read more: Capital Structure & Financing
Perrin & Co. models project economics, sources and uses, and financing across development, construction, and stabilization stages, and supports sponsors in lender discussions as borrower. The firm does not place securities, act as placement agent, or provide engineering or power-procurement services.
Finance & Accounting Advisory
Project-entity reporting, cost tracking, and close.
Read more: Finance & Accounting Advisory
Work can include construction cost tracking against budget, capitalization policies, lender and investor reporting for project entities, and close processes across a growing portfolio. Interim or fractional CFO leadership is available when a developer needs senior finance capacity. Reporting is designed for lenders.
Business Advisory
Site selection economics, pricing, and portfolio decisions.
Read more: Business Advisory
Financial decision support evaluates project returns under power, cost, and lease-up scenarios, analyzes pricing and tenant mix, and assesses retrofit versus new development decisions. Analysis helps leadership allocate capital to projects that can reach energization and stabilization on realistic timelines.
Institutional Credit & Liquidity Advisory
Credit perspective on project risk and lender requirements.
Read more: Institutional Credit & Liquidity Advisory
Perrin & Co.'s commercial credit experience informs how sponsors present development risk, pre-leasing, and guarantee exposure to lenders. Where delays or overruns pressure financing, the firm supports liquidity planning and extension or amendment discussions on the sponsor's behalf. Terms vary by lender and project.
Where to start
- Capital StructureDevelopment and stabilized financing.
- Business AdvisoryProject and investment decisions.
Technology-sector advisory vs. Perrin & Co.'s Technology Solutions. This page describes financial and business advisory to companies operating in the technology sector. It is distinct from Perrin & Co.'s Technology Solutions capability, which helps clients in any industry modernize their own finance systems and workflows.
More in Technology & Telecommunications
Discuss your data centers & digital infrastructure priorities
A confidential conversation with Perrin & Co. — no obligation, and a candid view of whether we can help.