"Bankability" In Colocation Agreements: The Holy Grail

As investment in data centres continues to accelerate, bankability has become a defining issue for developers, operators and funders. Given the sheer capital required to build at scale, operators have to turn to debt and project financing in order to have the money to develop the data centre. While the physical building and land remains important, lenders increasingly focus on the contractual framework that underpins a project’s revenue. In practice, that means close scrutiny of customer contracts as the key revenue-generation assets.

In simple terms, bankability is about whether a data centre project can support third-party financing on acceptable terms. For data centres, that assessment is rarely driven by the land or building alone. The most valuable element of a data centre business is the revenue generated by customer contracts. It is those contracts that ultimately repay the debt.