Blue Owl Denies Report Of Financing Issues On $4B CoreWeave Project
Blue Owl Capital is pushing back against reports it struggled to find a lender for a $4B data center development under construction in Pennsylvania.
Business Insider reported Friday that the publicly traded firm looked for a lender for the CoreWeave-leased development in Lancaster but was unable to find any takers. Blue Owl denied it had any financing issues for the project in a statement to Bisnow.
“The central premise of the Business Insider article — that we encountered financing challenges related to the Lancaster project — is incorrect,” the spokesperson said.
Blue Owl has only committed to provide $500M in bridge financing for the project through March, a deal the spokesperson said remains in place. The firm was “enthusiastic about our CoreWeave-tenanted data center investments,” but noted that its exposure to CoreWeave represented just 1% of its real assets under management, the spokesperson said.
One executive told Business Insider they passed on the debt because of CoreWeave’s below investment grade rating. The artificial intelligence cloud computing firm has had a volatile first year of trading since it went public in March and became one of the most closely watched data center firms.
The debt shopping snapshot is a window into recent challenges developers have had finding the trillions of dollars needed to finance the artificial intelligence revolution.
CoreWeave announced plans for a 100-megawatt data center at the Lancaster campus in July with capacity to expand to 300 MW. The project was formally rolled out at the inaugural Pennsylvania Energy and Innovation Summit, which included appearances from President Donald Trump and Pennsylvania's Sen. Dave McCormick and Gov. Josh Shapiro.
The project is being developed with capital from Blue Owl, Chirisa Technology Parks and Machine Investment Group. Blue Owl and Chirisa have a partnership to develop up to $20B worth of data centers and had 500 MW under development in Virginia and Pennsylvania at the end of August.
While Business Insider reported on potential financing challenges at the property Friday, Bloomberg reported that Blue Owl had reached a deal to sell a $1.4B portfolio of loans to a group led by Chicago-based insurer Kuvare Holdings for 99.7% of the debt’s par value.
That deal was reportedly executed just in time to avoid halting redemptions in the firm’s Blue Owl Capital Corp II fund. Blue Owl acquired Kuvare in a $750M deal in 2024, and the group that purchased the debt included the California Public Employees’ Retirement System, Ontario Municipal Employees Retirement System and British Columbia Investment Management Corp.
Blue Owl reported fourth-quarter earnings Thursday that beat analyst forecasts, with $448M in total investment income, up 13.5% year-over-year. Its shares are trading down more than 10% over the last five days and off by more than 25% over the last month.
Returns on existing data center developments currently pale in comparison to new builds, and developers have had trouble finding buyers to take properties out of their portfolios. Investors are also growing more wary of a potential AI bubble and more cautiously eyeing the creative financing techniques that tech giants like Meta have been using to push data center debt off their balance sheets.
