Is the power reimbursement part of my yield or not?
I've been reading the summary on a data center fund and the distribution number they quote includes something they call power and infrastructure reimbursement. As far as I can tell that's the tenant paying back the cost of electricity the ownership entity bought on their behalf.
So money comes in and roughly the same money goes out to the utility. If the pass-through is exactly matched, it's not income, it's a reimbursement flowing through, and including it in the top line makes the fund look bigger than the economics it delivers to me. That's how I'd have described it a month ago.
But somebody pointed out that these arrangements aren't always exactly matched. The owner sometimes buys power under a contract and rebills at a rate with a margin, or holds capacity it can rebill at a better price than it pays. In that case there is a real spread and pretending it's all a wash understates what the asset earns. There's also the reverse risk, where the owner is on the hook for a price it can't fully pass on, which makes the line a place a loss can hide.
I don't know how to tell which of those I'm looking at from a summary document, and I don't know whether to strip the line out of my yield math or trust it. If you own something like this, do you count that line or not?
How do you treat power reimbursement in a data center distribution figure?
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