Build-to-suit
A data centre built to one customer's specification, usually with a long lease signed before construction starts. Financed with a construction loan and later refinanced with a lease-backed bond or joint venture.
How it works
In a build-to-suit the developer constructs a data centre to one customer's specification, usually after the customer has signed a long lease. The design, power capacity and cooling are fixed for that tenant, and the lease often starts on completion. It contrasts with speculative development, where the developer builds first and leases later.
In GPU and data centre deals
Build-to-suit projects are financed with construction debt sized on the signed lease, then refinanced into longer-term debt once rent starts. Because the building is designed for one tenant, lenders focus on that tenant's credit, the completion risk, and what the building is worth if the lease ends. Delay penalties and termination rights for late delivery are central, as is the contractor's performance security.
What gets negotiated
- Delivery date, delay damages and the tenant's termination right for late delivery
- Construction contract terms, guarantees and performance bonds
- Lender step-in under a direct agreement with the tenant
- Re-letting value if the original tenant leaves at expiry
In the filed deals
Meta's Hyperion campus in Louisiana is leased to Meta under 11 triple-net leases and financed through the Beignet Investor notes.
For in-house counsel
Take it to the documents
The filed wording behind GPU and data centre financings, for either side of the table. Previews are open; the full text is free with InfraCompute Weekly.
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- Contract libraryGPU contracts, leases, power, equity and JVs, quoted from filed contracts.
- Issues list builderBuild an issues list from the lender’s or the borrower’s side.
- The legal desk for in-house counselContract library, issues lists, checklists and English law notes.
Related terms
Explanatory definition, not a statement that a particular transaction contains this term or a substitute for its contractual definition.
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