Wells Fargo, Goldman Sachs, and Citibank co-led a $735M CMBS refinancing for Vantage Data Centers' Phoenix campus. The deal refinances $560M existing debt and returns $164.5M equity to sponsors.
Key details of the refinancing:
- Loan Size & Structure: The deal secures a $735–$750 million, five-year, fixed-rate loan originated by Wells Fargo, Citibank, and Goldman Sachs.
- Collateral: The loan is backed by three fully leased, single-tenant data centers on Vantage’s Goodyear campus, with a combined capacity of 64 megawatts across 496,000 square feet.
- Use of Proceeds: The refinancing will pay off $560 million in existing debt, cover an estimated $10.5 million in closing costs, and return $164.5 million in equity to Vantage Data Centers.
- Tenant & Leasing: All three data centers are leased to a single, undisclosed hyperscale tenant identified by Fitch Ratings as AAA-rated, likely one of the major Big Tech firms. The leases are structured as six separate 15-year agreements, with a weighted average remaining term of 13.9 years and extension options that could stretch the average lease term to over 25 years.
- Market Context: The Phoenix area’s data center inventory jumped 67% in 2024, all of which was absorbed, making it the fourth-largest data center market in the U.S. with a vacancy rate of just 1.7% in early 2025.
Strategic Implications:
- The loan is expected to be sold as a commercial mortgage-backed security (CMBS), with Trimont as the master servicer, and is scheduled to close by July 10, 2025.
- This refinancing is part of a broader wave of capital-raising by Vantage Data Centers, which has recently secured nearly $6 billion through separate transactions to fund its North American and global expansion.
The $750 million refinancing for Vantage’s Goodyear, Arizona, data centers reflects both the company’s strong position in the hyperscale data center market and the surging demand for digital infrastructure in Phoenix, driven by cloud, AI, and enterprise needs.
Impact on Alternative Finance Ecosystem
The Squeeze on Middle Market Players:
This Wells Fargo deal represents exactly what's pushing alternative lenders out of their traditional comfort zone. When institutional players can execute $735M deals with 150 basis point premiums over corporate rates, they're not just competing for the same deals - they're redefining what constitutes an attractive risk-adjusted return.
Three Key Ecosystem Disruptions:
- Capital Requirement Escalation: Traditional alternative lenders typically operate in the $5-50M range, but data center deals now require $100M+ just to compete for secondary-tier projects. Private credit funds tracked 29% more specialty finance allocations in 2024, with much of that flowing toward infrastructure plays that require larger check sizes.
- Covenant Structure Evolution: Unlike typical alternative lending deals where covenant-lite structures command premium pricing, data center financings combine institutional-style documentation with alternative lender speed. This creates a hybrid product that neither traditional banks nor smaller alternative lenders can easily replicate.
- Tenant Credit Migration: The AAA-rated single tenant structure in this deal shows how credit risk is shifting from borrower evaluation to tenant analysis. Alternative lenders without hyperscaler relationship experience face a significant underwriting knowledge gap.
How Smaller Players Can Compete
Market Positioning Strategies:
Construction-to-Permanent Hybrid Products: While institutions focus on stabilized assets, alternative lenders can capture higher spreads during the 18-36 month construction phase. Data center development financing typically ranges 65-80% loan-to-cost, with construction lenders earning additional 100-150 basis points for completion risk.
Regional Market Penetration: Phoenix's 67% inventory growth pushed major players toward tier-one markets, leaving opportunities in emerging hubs like Northern Indiana, Arkansas, and Kansas where land and power remain accessible. These markets offer 300-500 basis point premiums over institutional pricing.
Tenant Diversification Play: Focus on multi-tenant colocation facilities rather than competing for single hyperscaler deals. Enterprise customers in the 2-20MW range provide more stable tenant diversification with 200-300 basis point higher rates than hyperscaler leases.
Alternative Lending Structure Comparison
The Structural Challenge: Alternative lenders excel at relationship-based underwriting and flexible terms, but data center deals require infrastructure expertise that most don't possess. The technical due diligence on power systems, cooling efficiency, and fiber connectivity creates barriers that favor specialized institutional players.
Capital Structure Innovation: Private credit funds are responding by creating asset-based finance (ABF) products specifically for data centers. These structures allow smaller funds to participate in larger deals through syndication while maintaining their speed and flexibility advantages.
Competitive Response Framework
Private Credit Market Evolution: Private credit allocation to specialty finance increased from 10% in 2023 to 18% in 2024, driven largely by infrastructure demand. Alternative lenders who can't scale into data centers risk losing institutional investor allocation to funds that can.
Partnership Strategy: Rather than competing directly with Wells Fargo-led deals, alternative lenders should partner with regional developers and provide bridge financing for land acquisition and permitting phases. This $5-25M sweet spot remains underserved by institutional players.
Technology Integration: Successful alternative lenders are building data center-specific underwriting platforms that can evaluate both real estate fundamentals and technology infrastructure requirements. This allows faster decision-making than institutional committees while maintaining appropriate risk assessment.
Market Share Battle
Current Alternative Lender Position: Alternative lenders comprised 19% of non-agency loan closings in Q1 2025, down from 48% a year earlier. This decline directly correlates with institutional banks capturing larger, more profitable infrastructure deals like data centers.
Defensive Strategies:
- Niche Specialization: Focus on edge data centers, disaster recovery facilities, and enterprise colocation where institutional lenders lack expertise
- Speed Premium: Maintain 30-45 day closing capabilities versus 90-120 day institutional timelines
- Relationship Leverage: Build direct relationships with data center general contractors and equipment vendors for deal flow
Our Opinion
This Wells Fargo transaction validates the institutional appetite for data center assets, but the real opportunity for alternative lenders lies in the massive funding gap. With $170 billion in asset value needing financing in 2025 and data center financing volumes expected to double to $60 billion this year, there's substantial demand for alternative capital sources.
The Phoenix market fundamentals support aggressive lending strategies: vacancy rates at record lows of 1.9%, 245.5 MW of positive absorption in 2024, and rental rates increasing by as much as 20% on lease renewals
Alternative lenders who can navigate the construction and operational risks while providing speed and flexibility will capture significant market share in the $25-100M deal range that institutional players often overlook.
Headlines You Don’t Want to Miss
Upstart, Cobalt Credit Union Partner to Expand Digital Lending, AI-Powered Loan Solutions
Upstart and Cobalt Credit Union have partnered to expand digital lending by leveraging Upstart’s AI-powered platform for personal loans, HELOCs, and auto refinance, aiming to enhance Cobalt’s lending capabilities and digital experience for members. This collaboration, which began with Cobalt joining the Upstart Referral Network in March 2025, is designed to increase loan accessibility and approval rates through advanced, data-driven credit decisioning.
Starling Bank eyes US expansion with plans to acquire lender
Starling Bank, a leading UK digital bank, is planning to expand into the United States by acquiring a nationally chartered US lender, with a focus on East Coast banks holding around $2 billion in assets. The move is part of Starling’s strategy to establish a significant presence in the US market by leveraging its advanced digital banking technology and hiring US bankers to facilitate the acquisition process.
Nuveen Private Capital Named 2025 “Institutional Direct Lender Firm of the Year” in the 16th Annual International M&A Awards
Nuveen Private Capital, comprising Churchill Asset Management and Arcmont Asset Management, was named the 2025 “Institutional Direct Lender Firm of the Year” at the 16th Annual International M&A Awards, recognizing its global scale and leadership in private credit. The award highlights Nuveen Private Capital’s strong integrated platform and its significant impact supporting U.S. and European private equity transactions over the past year.
.jpg){kind=small}
.png)