During the planning stage attention must be given to the real estate acquisition as well as the power, carrier and network infrastructure and necessary supply chain resilience. Outline planning is crucial alongside developmental finance, tax, incentives and environmental considerations such as land, acquisition and clean up.
In the developmental stage attention should be given to design construction, equipment procurement, asset financing, power and carrier infrastructure, tax incentives and developing M&E systems as well as carrying out regulatory risk assessments (this could be equally important to the planning phase).
Energy risk and sustainability have become critical issues for data centre owners for various reasons, such as supply costs, increasing concerns about security of supply and closer scrutiny of energy use as a major source of carbon emissions. We assist clients in taking a holistic approach to energy demand management. ESG scrutiny, regulatory and policy pressures coupled with commercial imperatives have led to new technology and business processes.
During the operational stage the following aspects must be taken into consideration: wholesale leases, service level agreements, power supply and metering, hard/soft supply arrangements, connectivity and peering, cybersecurity and regulatory requirements, facilities management, public procurement, data protection, insolvency and dispute resolution.
Our team has the capability to advise on all regulatory aspects of the data centre life cycle, including: cybersecurity, sustainability, risk assessment, taxonomy, telecoms/connectivity to support edge cloud and computing, energy, planning – as well as with facilitating and coordinating risk assessments and developing self-regulatory frameworks. Regulatory compliance plays a role in the entire process, from strategic development to the delivery of services.
Data centres are unlike traditional real estate assets because the income derived from operational services makes up a high proportion of overall income. At this stage consideration must be given to carbon reduction, bulk energy purchase, location choice, intellectual property, cash flow, financial flexibility and regulatory compliance in terms of electronic communications and network information systems regulation.
We can advise on the real estate and corporate disposal of a data centre, as well as manage data protection issues.
The revenue stream generated by operating a data centre can be suitable for project finance. This is typically described as the long-term financing with a non-recourse or limited recourse financing structure. The key characteristic is that the project debt is exclusively repaid by the cash flow generated by the project. Compared to project finance in other sectors, the financing of a data centre also includes elements of real estate finance.
The construction or ownership of data centre should be analysed for tax purposes to prevent and remove possible tax risks. Data centres could indeed attract the attention of local tax authorities which may be willing to assess higher tax for the functions performed in a certain territory or assess the presence of a permanent establishment of a foreign entity. In certain countries, the impact of VAT credits shall have to be investigated to prevent cash traps.
Aug 07 2023
Jun 14 2023