Developers Struggling To Cash Out On Big Tech Data Centers

Developers have no trouble finding capital to build data centers for the world’s largest tech companies. But once those data centers are built and leased, they’re having to get creative to turn real estate’s most in-demand assets into cash. 

Data center construction is booming, with a growing wave of new facilities to support the world’s largest tech companies’ AI ambitions being delivered by third-party developers. Most of these hyperscale data centers have been fully leased to Amazon, Microsoft and Google months or years before construction is completed and the first servers or GPUs are switched on. 

With demand for new data center inventory showing no signs of slowing, many developers have been eager to convert these stabilized assets into capital for new data center projects. But despite unprecedented investor interest in the sector, potential buyers for these fully leased data centers are few and far between — a product of their multi-billion-dollar price tags and comparatively low returns.

While new buyers for such “core” data center inventory are expected to emerge, for now, developers’ need to monetize their stabilized assets is leading them to use a series of new debt and equity structures that are transforming the industry’s capital markets landscape. This has manifested most prominently in the skyrocketing use of asset-backed securities and commercial mortgage-backed securities for stabilized data centers.

“There's a lot of creative transactions or financing vehicles that have been used in the last 24 months that historically have not been sought after by developers or operators,” said Gordon Dolven, CBRE’s director of Americas data center research. 

While a flood of new capital is flowing into the data center sector, most of that investment continues to target the build-out of new facilities. An August CBRE report found 62% of investors favor deploying capital to new development over other market segments. As long as a tenant and power are in place, firms looking to build are finding liquidity easy to come by. 

But the landscape is different once a data center is built and leased. Just 7% of investors target such stabilized core assets, according to CBRE, a number analysts say reflects the small pool of capital interested in acquiring fully leased hyperscale data centers.

North American data center sales dropped more than 50% year-over-year in the first half of 2025, with total transaction volume under $1B, CBRE reported.

Many investors prefer new development over acquiring existing assets because the former offers much higher returns. This is particularly true of hyperscale facilities fully occupied by a tenant signed to long-term leases, as there may be little room for a buyer to squeeze additional value out of the facility for more than a decade. 

“You want to be building, not necessarily buying, at least from our point of view,” Partners Group's Fentress Boyse said at a Bisnow event in August. “When you make an acquisition, you generally need to grow it in one way or shape or form, and that may not be possible against the market backdrop that we have today.”

Beyond lower yields, the high price tag of stabilized data centers poses a hurdle for capital seeking acquisitions. Carl Beardsley, senior managing director in JLL's data center capital markets group, said a fully leased, 40-acre site with five buildings can exceed $3B in value. This massive capital commitment for a single asset limits the pool of potential buyers.

Given the scarcity of equity sales options, developers are increasingly leveraging securitized debt markets to monetize stabilized assets.

Eighteen asset-backed securities and single-asset, single-borrower CMBS deals totaling $13.4B closed in the first half of 2025, more than double the volume in the first half of 2024, according to JLL. 

This summer, Blackstone-owned QTS obtained a $1.5B CMBS loan to refinance a pair of data centers in Atlanta and Richmond. And this month, DataBank raised more than $1B in an ABS deal backed by a trio of facilities in Atlanta, New York and Virginia. 

Investors have proven eager to snap up these bonds, which typically provide the data center owner with liquidity to pay off construction debt, while a quarter of the loan’s value can be recycled into funding new development, according to Goldman Sachs. 

“There’s a lack of the traditional buyer that wants stabilized, so developers are utilizing the SASB and ABS market,” said Beardsley. “The activity there is going to skyrocket because there’s just a lack of core capital.” 

The sudden widespread adoption of ABS and SASB deals has been the most significant shift in the data center capital markets landscape over the past two years, industry experts say.  These securitized debt issuances didn't feature in data center financing until recently, but now the market for these securities is exploding.

The first data center SASB was only issued in 2021. Now, data centers account for 13% of the entire SASB market, according to Goldman Sachs. 

But these securitizations don't cater to the post-stabilization requirements of all developers.

A rising number of data center builders need swift equity exits due to their business models. And some data center owners, like publicly traded REITs, face limitations in taking on debt, making equity transactions their preferred method for recycling capital.

Yet with limited capital pursuing traditional acquisitions of stabilized assets, developers are thinking outside the box and pursuing new deal structures to expand the capital pool. 

The most prevalent method for equity deals is the forward takeout, Beardsley said. In this arrangement, an equity group agrees to completely finance a project's development and commits to purchasing the developer's share at a predefined cap rate once the tenant moves in. While these forward sales offer buyers a more favorable price, they also entail assuming all of the project's risk. For the developer, this means a smaller return but a guaranteed profit.

One prominent forward takeout executed this year was Blue Owl and Primary Digital Infrastructure’s deal with developer Crusoe that fully funded construction and permanent financing for the first Stargate data center in Abilene, Texas. 

“We're seeing a tremendous amount of that activity in the market,” Beardsley said. “It’s because a lot of these developers have anxiety around what their exit will be.”

Another equity transaction becoming more common is hyperscalers including purchase options in their agreements with third-party developers, typically two to three years into the lease. This strategy allows them to convert GPU expenditures into long-lived data center assets on their balance sheets, and they are willing to pay developers a premium for these deals.

Additionally, some developers that also operate their data centers have started selling majority stakes in their facilities. They maintain a minority position and continue to operate the data centers, a tactic similar to what REITs like Digital Realty have employed over the past 24 months to recycle capital for new developments.

But industry executives anticipate far more traditional investment sales of stabilized data centers in the months and years ahead due to the emergence of funds focused on providing exit capital for hyperscale developers. 

This week, Blue Owl Capital and a Qatari sovereign wealth fund announced the launch of a $3B infrastructure fund focused on the acquisition of stabilized assets. More such announcements are expected in the months ahead, a trend Beardsley believes will lead to a surge in equity transactions in the first half of next year. 

“There are more core funds being built to do equity takeouts of this capital,” Beardsley said. “We're going to see more trades. Instead of just a focus on the ABS and the SASB market, we're going to see more takeouts by new capital groups.”