Starwood-Backed European Data Centre Firm Gets Massive New Loan
A data centre developer half-owned by Starwood Capital has bagged a €1.7B (£1.5B) loan to build out its development pipeline and buy more sites.
Ireland-based Echelon Data Centres has secured the debt facility from Morgan Stanley, the company said.
Echelon has eight campuses across Europe totalling 1.2 gigawatts of capacity, 400 megawatts of which is operational or under development.
Starwood Opportunity Fund XII and Starwood Real Estate Income Trust invested $850M (£630M) in Echelon in 2024, giving Starwood a 50% stake in the business. The investment gave Echelon an enterprise value of €2.5B.
Morgan Stanley also lent Echelon money at that time, combining with United Overseas Bank to issue the company €900M in debt.
At the time of Starwood’s investment, Echelon had developments in Ireland and the UK, but since then, it has expanded into Spain and Italy. It struck a €2B joint venture with Spanish power company Iberdrola in the former and is building a €3B campus on the outskirts of Milan in the latter.
In the UK, it has a 17 MW scheme in the Docklands area of east London and a 30 MW scheme in Chesham, in Buckinghamshire. In Ireland, it is building a €3.5B scheme in County Wicklow, among other projects.
Echelon was set up in 2016 by Irish developer Niall Molloy, whose previous company Aldgate Developments had majored on the office sector.
The data centre world has been turning to debt markets with greater frequency in recent months to finance new development as well as recapitalise existing assets.
Data centre asset-backed securities and commercial mortgage-backed securities, which are relatively recent phenomena, have quickly become a major force in global debt markets.
Just five years after the first single-asset, single-borrower CMBS deal for the sector, data centres last year accounted for 13% of such transactions, data from Goldman Sachs showed.
About a quarter of the value of these loans is typically recycled into funding new development, the bank added.
