Vantage Raises $300M to Fund Data Center Construction

Vantage Data Centers has borrowed an additional $295 million to pay for data center construction in Silicon Valley and Washington State.

There has been a shortage of ready data center space in some major US markets, including Silicon Valley, and several data center providers have been racing to expand inventory. For example, it was welcome news for Vantage when an existing customer decided they wanted to reduce the amount of capacity they had reserved at the company’s Santa Clara, California, campus last year, because the provider would be able to immediately bring new capacity to what has been a seller’s market.

Read more: Silicon Valley - a Landlord's Data Center Market

While data center providers enjoyed a boom last year, it’s unclear at this point how the sharp drop in stocks across the tech sector that has been happening this month will affect demand for wholesale data center space in 2016. The sell-off of tech stocks has dragged down share prices of all of Vantage’s major publicly-traded competitors, such as CoreSite Realty Corp., Digital Realty Trust, and DuPont Fabros Technology to varying degrees.

The new financing brings Vantage’s credit facility from the previous $275 million to $570 million. Expansion of the credit facility was led by RBC Capital Markets.

After bringing the 12MW of capacity to market that was freed up by an existing customer in October, Vantage started construction of a fourth building on its Santa Clara campus, a project expected to bring 6MW of capacity online in the fourth quarter.

Sureel Choksi, Vantage president and CEO, said in a statement that the company was also expanding capacity on its Quincy, Washington, campus and was eyeing potential entry into new markets.

Demand for wholesale data center space in North America exploded last year, as major providers of Web content and cloud services, and other technology companies expanded capacity to support their growth.

Vantage signed at least four big leases in Santa Clara last year, according to a report by North American Data Centers, a commercial real estate firm focused on data centers. The deals included 10MW with Microsoft, 3MW with Arista Networks, 2MW with VMware, and 2MW with Symantec, the report said.

Read more: Who Leased the Most Data Center Space in 2015?