Data-center financing turns selective: SB Energy delays IPO, Oracle invokes force majeure

According to an October 5 report by TMTPost, financing for data centers is becoming more selective even as capacity remains tight. CBRE data released in September showed that in the first half of the year, the vacancy rate across eight major North American data center markets was only 1.4%, and more than 80% of capacity under construction had already been pre-leased. That did not mean every project received the same access to capital.

On September 21, SB Energy updated its prospectus. The SoftBank-backed energy and data center developer said that of 8.8 GW of signed IT capacity, 0.8 GW was under construction, 8 GW had not started construction, and operational capacity was zero. All of that capacity corresponds to affiliates of SoftBank and OpenAI, with 8 GW concentrated in one Ohio campus leased by OpenAI. SB Energy expects to spend about $174 billion over roughly six years to build data centers. The 8 GW campus has a 20-year long-term lease, but rent begins in phases by building, subject to conditions including available power facilities, completed construction, and commissioning.

In late September, SB Energy delayed its IPO roadshow. It still needs to respond to additional regulatory inquiries, and investors are reviewing its valuation and its dependence on OpenAI. During the same period, DayOne and Switch, which already have operating campuses, continued preparing for listings. More recently, Oracle was reported to have sent a 'force majeure' notice to a data center developer, seeking to preserve the right to delay payments if a project cannot be put into operation on schedule.

The report said developers are still raising money for expansion, while cloud vendors as major customers are drawing boundaries around delivery risk. Long-term leases lock in future revenue, but developers must first fund years of construction, and power or engineering delays can extend that period. Capital is therefore treating platforms with existing operating revenue differently from projects that rely on forward contracts with a small number of customers, with customer prepayments and chipmaker guarantees also entering financing arrangements. SB Energy's data centers have no operating rent yet, so construction costs and interest must be paid first; if the first phase cannot collect rent, later construction still depends on external financing.