Vantage Data Centers gets $350M loan for Santa Clara site

Vantage Data Centers took out a $350 million loan backed by the site of a research building it owns in Santa Clara, with much of that money likely going to redeveloping the property into a data center campus.

French bank Societe Generale provided Denver-based Vantage with the loan in the form of a deed of trust backed by the nearly 7-acre site at 2590 Walsh Avenue. A deed of trust is similar to a mortgage except that it involves a neutral third party in addition to a lender and a borrower. A copy of the loan filed with Santa Clara County’s Clerk-Recorder’s Office last week didn’t disclose financial terms or the purpose of the loan.

Neither Vantage nor Societe immediately responded to requests for comment.

Yet much of the loan will likely be used to finance Vantage’s plans to replace the nearly 114,000-square-foot research building with a data center campus more than four times larger at 479,000 square feet. The company paid $40 million to acquire the Walsh Avenue property last year, according to title service records.

Those records don’t show any deeds of trusts or mortgages filed with the Clerk-Recorder’s Office when the sale closed, indicating that Vantage either paid all cash for the site or assumed the previous owner’s $9.3 million mortgage from City National Bank recorded with the office in 2016. If the latter is true, then the developer’s new deed of trust with Societe and insurance company First American Title, the neutral third party in the legal agreement, would supersede City National’s loan.

Although it’s unclear how much of the loan Vantage plans to allocate to funding its redevelopment plans and financing/refinancing its 2021 acquisition of the property, the large amount of the loan indicates the company could do both without having to raise additional funding. That Societe felt comfortable providing Vantage with a loan of that size even though its project remains under city review speaks to its confidence in the latter’s plans eventually becoming reality and in Silicon Valley’s data center market, the tightest and most expensive in the U.S.

The region’s data center vacancy rate was 1.3 percent at the end of June, an all-time low, according to commercial brokerage CBRE. Its average rental rates, meantime, were between $150 and $175 per kilowatt a month during the first half of this year, the highest in the nation and North America in general, according to CBRE.

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