Azrieli Group Secures Over €1 Billion in Financing for Norwegian Data Center Amidst Project Delays

Azrieli Group is moving forward with its data center operations in Norway, announcing a financing agreement exceeding €1 billion just two days after reporting schedule changes for a key project. The agreement, finalized through Azrieli's subsidiary Green Mountain with a foreign bank, provides a credit line of up to €1.007 billion for the construction of an 80-megawatt data center campus for an international technology client. This financing structure allows the company to cover up to 85% of recognized construction costs through debt, subject to meeting agreed-upon conditions. Azrieli is also set to recover approximately €260 million in equity already invested once the first credit draw is made, freeing up capital for other uses without waiting for project completion.

The financing costs will be based on the Euribor interest rate plus a margin of 2-3% annually. The construction credit period extends up to seven years, with surplus project cash flow intended for debt repayment after construction concludes. The agreement also includes a €25 million revolving credit line for operational expenses, a €165 million facility for customer-ordered components, and a €103 million line for VAT payments. An additional €100 million expansion of the construction facility is possible but requires separate bank approval.

This financing announcement follows Azrieli's recent update regarding client-requested specification changes that have led to revised project timelines. While these changes were mutually agreed upon, they push back the service delivery dates. The initial 20 megawatts are now expected to be delivered in July 2027 instead of March, with the second phase delayed by about three months, pending service agreement amendments. The full 80-megawatt project was initially projected to generate an average annual net operating income of approximately €117 million over a 15-year service contract.

The new financing agreement imposes certain obligations on Azrieli, including providing guarantees for construction cost overruns, a commitment to complete the project, and maintaining a credit rating of at least BBB- while its guarantees are active. Financial covenants, such as a debt service coverage ratio of at least 1.05, are also in place. The agreement outlines conditions for immediate debt repayment, including material breaches, failure to meet financial covenants, or significant project delays, subject to cure periods and exceptions.

While the financing agreement reduces uncertainty regarding funding, the actual drawdown of credit is contingent on project progress, approvals, and meeting the agreement's conditions. The primary concern remains the revised timeline for revenue generation and the potential for increased construction and financing costs due to the client's requested changes.