My preferred equity position in a 10 MW Phoenix build-to-suit just got handed back to me as a deed in lieu and I am trying to figure out what I actually own now
The developer ran out of runway at month nineteen. Construction was 70% complete, the utility interconnection was still eight months out, and the GP had burned through the interest reserve by December. They offered a deed in lieu rather than a foreclosure fight, and I took it because the asset was real and the alternative was eighteen months of litigation in Arizona. What I did not expect was that "70% complete" meant the shell was up and the mechanical rough-in was done, but the fiber pathways were not pulled, the generator pads were poured but the generators themselves were not purchased, and the cooling infrastructure was specified but not ordered. So I own a concrete box in Goodyear with a 34-month-old power agreement that the utility says is still valid but that my attorney says needs to be confirmed in writing before I rely on it. The equity I put in was $4.1M structured as a 14% current pay preferred with a 1.4x multiple on the return hurness before the GP saw any promote. I received seven months of current pay before distributions stopped. I have a cost basis now in a half-built data center in a market where land is cheap and power is not, and I need to decide whether to bring in an operating partner to finish it, sell the shell as-is to someone with the capital and the operator relationships, or sit on it while the power queue situation in the Phoenix metro clarifies. Nobody at the GP level is returning calls with any urgency, which tells me they have already moved on mentally.
