A free data center financial model: three business models, one campus

A 180 MW campus underwritten as turnkey, powered shell or powered land, a monthly construction cash flow, levered returns, and what a rent miss, a delay and a correlated downside each cost.

Julian R. Sterling · from The Data Center Development Handbook

The same 180 MW site can be three different businesses. Built turnkey at $11 million a megawatt it yields 10.9% on cost; as a powered shell at $5 million, 10.2%; sold as powered land it is a trade, not a building. This model underwrites all three and then runs the monthly cash flow: a base levered return of 22.6%, and 18.1% if energization slips twelve months.

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One Excel file, no macros, nothing locked. No account, no email address.

The_Underwrite_Computed.xlsx51 KB

The three business models

	Turnkey	Powered shell	Powered land
Capital cost per MW	$11m	$5m
Rent, $ per kW-month	105	45
Yield on cost	10.9%	10.2%
Value created	$794m	$327m	$33.4m

What goes wrong, in basis points

Scenario	Levered return	Against base
Base (3% rent escalator)	22.6%
Rent 8% below plan	20.2%	-239 bp
Energization 12 months late	18.1%	-450 bp
Correlated: delay, +5% cost, -8% rent, +25bp exit cap	14.5%	-809 bp

The delay costs more than the rent miss, and it has to be funded: $94.8m of new equity, because lenders do not enlarge a construction loan for delay. And the combined case is not the sum of its parts. Run it, do not add it.

What is in the file

1. The Inputs: Capacity, capital cost, rents, NOI, exit caps, loan to cost and hold. The inputs the book does not state are marked ADDED, with the reason.
2. The Three Models: Turnkey, powered shell and powered land reconciled to the figures the chapter prints.
3. The Cash Flows: Monthly, five scenarios side by side, each driven by its own parameter block.
4. Scenarios: Levered returns and capital calls side by side, in basis points.
5. The Escalator: What a point of rent escalation is worth over a fifteen-year lease.
6. Powered Land: The hit rate at which buying and entitling land breaks even, in one cell.
7. Checks: Thirty-one controls, all passing as shipped.

Questions people ask about it

Turnkey or powered shell?

Turnkey earns the higher yield on cost and the higher rent, and carries the fit-out and the tenant risk. The model shows both on the same site so the choice is a number, not a view.

Where does the construction interest rate come from?

It is derived, not invented: the chapter's own figure for the interest cost of a twelve-month slip, on its own drawn balance.

Can I change a single scenario?

Yes. Each scenario column on the cash flow sheet has its own parameter block.

Is it free?

Yes, no sign-up and nothing locked.

The rest of the files

This template is one of the companion files for The Data Center Development Handbook: the full set adds a blank model set, working documents, forty self-marking questions and three worked cases. Free, like this one.

Open the companion files →

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