By delivering on its sustainability commitments, Aligned has added $250 million in expansion capital, enabling the developer to keep pace with customer demand for data center capacity.
Aligned has increased its senior secured credit facility by $250 million to $1.25 billion, the company said. When the credit line was announced last September, Aligned became the first data center company to use a sustainability-linked loan (SLL), in which the borrower earns a lower interest rate by hitting benchmarks for sustainable practices. The company says it has met and exceeded all the requirements of the initial credit line, which laid the groundwork for the expansion.
The company is one of the beneficiaries of growing interest in sustainable finance, as investors seek to align their portfolios with climate resilience. It’s a trend that has large implications for the data center industry, which is experiencing a historic influx of capital to build digital infrastructure.
“Aligned’s credit facility upsizing will provide increased financial capacity and flexibility to support the expansion of our data center portfolio in step with rising demand and further development of our core sustainability initiatives,” said Anubhav Raj, Chief Financial Officer of Aligned.
Sustainability is a ‘Top-of-Mind Concern’
Aligned builds “smart infrastructure” to solve capacity management challenges through innovation in cooling and the supply chain. Its offering is positioned to appeal to technology-focused customers, especially growing Internet companies. Aligned operates data center campuses in Dallas, Phoenix, Salt Lake City and Ashburn, Virginia.
Sustainability has long been an emphasis for Aligned, which prioritizes efficiency and energy conservation in its wholesale and build-to-scale data center solutions. Recent headlines have brought climate risk to the fore, prompting customers to focus on eliminating fossil fuels from their IT footprint.
“Among sophisticated hyperscale and enterprise companies, sound environmental stewardship is now a top-of-mind concern,” says Andrew Schaap, CEO of Aligned. “While no one company or organization can solve the world’s sustainability challenges, Aligned’s adaptive data center platform is instrumental in reducing environmental impact while lowering the total cost of ownership for customers — a win-win — and it’s gratifying that our relationship banks and investors recognize this by facilitating our ability to respond to continuously increasing demand.”
The lead arrangers for the facility included TD Securities, Goldman Sachs Bank, Deutsche Bank, Wells Fargo Securities, Citizens Bank, and Nomura Securities International. Goldman Sachs Lending Partners acted as the syndication agent; and ING Capital as the sustainability structuring agent.
ESG Progress Unlocks Cheaper Capital
SLLs belong to a family of sustainable debt that also includes “green loans” in which the borrowing will directly fund a sustainable project. Sustainability-linked debt instruments are not project-specific, but look instead to ensure a company’s overall ESG performance through sustainable performance targets agreed upon by the company and its investors.
Under terms of the loan, Aligned agrees to meet key performance indicators (KPIs) for its corporate performance on sustainability benchmarks, including:
- Renewable Energy: A commitment to match 100% of Aligned’s annual energy consumption to zero-carbon renewable energy by 2024.
- Sustainability Reporting: Transparency and continuous improvement across sustainability best practices. This target aligns the Company’s ESG reporting efforts with a leading global standard, maximizing consistency in ESG disclosure for Aligned stakeholders.
- Workplace Safety: A commitment to having / reporting on an industry-leading Total Recordable Incident Rate (TRIR).
Last year Aligned said it has matched the entire energy footprint of its data centers with purchases of renewable energy. Aligned is using a variety of options to meet this goal, including working with utility providers (like Arizona Public Service, which supports Aligned’s Phoenix data center campus) and procuring bundled Renewable Energy Credits. The company says its flexible renewable procurement strategy also allows it to adapt to specific customer requirements.
“Our company’s position is that an investment in digital infrastructure requires an investment in sustainability, which is essential to positive, lasting impact on our environment as well as long-term value creation,” said Raj.