A transformer nearly ate the pref on my way out of a 24 MW shell

1.9x on 250k over 3.5 years is the headline, but what did you actually pay to get there? Asset management fee, acquisition fee, the promote you mentioned. I'm trying to work out what the gross was before the sponsor took their cut, because that ratio is the thing I can compare across deals.

Curious about a piece nobody usually mentions. Who does the commissioning and ongoing electrical work on a shell like that? Is that the tenant's contractor once they take the space, or does the owner carry a service contract on the switchgear? I'm looking at where the recurring service dollars sit in this sector and it seems like most of it lives on the tenant side of the demarc.

62 weeks to 104 weeks on a piece of hard equipment doesn't shock me even a little. I've had eight month waits on gear a tenth that size.

What happens if Building B never energizes at all? That's the part I'd have been stuck on. Does the whole LP position still work on the strength of the leased building, or were you underwater without the second feed? Because if the answer is that A alone covers it, that's a very different risk than what most of these decks are selling.

Can someone say plainly what a powered shell is? I've read it three times now. My understanding is it's the building and the electricity coming to it, and the tenant installs everything inside. Is that right or am I missing a layer?

@thicket the part I want is the dirt underneath. Who owned the substation parcel and the easement run to the buildings? I've seen campus deals where the utility gear sits on a separate parcel controlled by someone else entirely, and that becomes the whole negotiation on exit. If the buyer paid up for interconnection rights on an unbuilt building, somebody papered those rights carefully.

Did the pref compound during the 11 months or just accrue simple? That's a real difference over almost a year and I never know which one these documents pick.

You said the load letter checked out. Checked out how? Did you call the utility, or did you read the letter and decide it looked like a letter? I ask because I'd have done the second thing and told myself I'd done the first. Sounds like the PO date was the same class of miss and you caught it after the fact.

Would you write the same check today at today's pricing? Entry basis on anything with contracted power has moved a lot since 2022, and the 8 pref with a 12 hurdle sounds like a structure from a cheaper year.

The shell to fit-out handoff is where I'd expect the bleeding. Who ate change orders when the tenant's design pushed past what the shell was built for? On my side of the business that's always the fight, and I can't imagine it's cleaner just because the building is bigger and the tenant has a real balance sheet.

Honest reading of your post is that the exit timing carried a lot of the return. An institutional buyer showing up wanting interconnection rights on a building that doesn't exist yet is a very specific moment in the market. If that buyer isn't there in month 42, you're holding a shell and an accrued pref balance for another two years. Did the LP agreement have any hold period limit, or was the sponsor free to sit?

@tally is asking the fee question, I want the waterfall. 8 pref, 70/30 over 12, and you landed low-19s net. So the sponsor cleared the hurdle comfortably and took a real promote. What I'd want to know is whether the promote was calculated deal level or on the partial sale alone, because a partial sale into a still-standing partnership is exactly where those clauses get interesting. Did you get a full distribution and a wind-down, or did they keep a residual interest in the unbuilt side?

Plain question. Would a listed data center REIT have gotten you something close to this over the same 3.5 years with no dry quarters and no PO dates to chase? I'm not saying it would. I'd just want to see the comparison before I signed up for a sponsor's timeline slide again.

11 months of zero distributions is the whole post for me. Accrued pref is fine if you don't need the money. I'd need the money. That's a good reason for me to stay out of this shape entirely, or size it so small the dry period doesn't matter.

This is my boiler story with three more zeros. The equipment lead time is the deal, the building is just the box it sits in. Every time I've been surprised by an operating asset it was a piece of hardware someone assumed would show up.

Going in order.

@tally, 2% acquisition fee at close, 1% of equity annually for asset management, promote as described. Gross was somewhere around 2.2x, I netted 1.9x. Not outrageous for the sector, but the fee load is why I wanted the leased building to stand on its own.

@quill, yes, A alone covered debt service and the pref with room. That was the whole reason I funded. I treated B as an option, and the option paid.

@juniper, that's it. Building, power to the building, tenant brings the racks and cooling systems inside.

@parcel, the substation sat on a carved-out parcel with a recorded easement to both buildings, and the interconnection agreement named the partnership. That's a state-by-state recording question and mine happened to be clean, so I'd have a real attorney confirm it rather than assume.

@wren, simple accrual, not compounding. Cost me a bit.

@anchor, fair hit. I called the utility's economic development contact and got a person to confirm the capacity allocation. I never thought to ask about equipment procurement because I didn't know that was a separate track from the capacity grant. It is.

@meridian, deal level, and the partnership wound down at the partial sale with the buyer taking the remaining interest. I got lucky on that structure.

@orchard, no hold limit. If your buyer doesn't show up, you sit. That's the honest risk and I don't have a defense for it.