Loan Size Example

$20 Million Data Center Construction Loan

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $20 million data center construction loan finances a small to mid-size enterprise or colocation data center, typically 5 to 15 megawatts of IT load. Data center construction is among the most capital-intensive CRE asset classes at $1,200 to $2,500 per square foot reflecting power infrastructure, cooling, redundancy, and security. Most $20M data center construction loans fund through specialty data center lenders, life co construction-to-perm with credit-tenant pre-leases, or bridge debt funds for speculative development.

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Capital Stack

What a $20M Data Center Construction Capital Stack Looks Like

$20M data center construction stacks combine senior construction debt with institutional equity. Pre-leases to credit tenants (hyperscalers, enterprise) materially affect financing terms and pricing.

Capital Source	Rate / Cost	Size / LTV	Notes
Specialty data center lender	SOFR + 350 to 525 (8.10 to 9.85%)	$20M / 65 to 75% LTC	With pre-lease to credit tenant
Life company construction-to-perm	6.50 to 7.50% (10 to 15 year fixed)	$20M / 60 to 65% LTV stabilized	Credit-tenant pre-lease required
Bridge debt fund	SOFR + 425 to 700 (8.85 to 11.85%)	$20M / 65 to 75% LTC	Speculative or value-add
Bank construction balance sheet	SOFR + 275 to 425 (7.10 to 8.85%)	$20M / 55 to 65% LTC	Sponsor recourse; depository

Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.

Sponsor Profile

Who Closes a $20M Data Center Construction Deal

Typical $20M data center construction sponsors are specialized data center developer-operators with completed projects and credit-tenant relationships. Sponsor net worth $20M to $200M+. Capital structure typically includes $13M to $15M of construction debt at 65 to 75 percent LTC, $7M to $9M of common equity, and $1M to $3M of sponsor co-invest.

From the CLS CRE Pipeline

A Real $20M Example

On a $22M ground-up 8 megawatt enterprise data center construction in a Sun Belt market with a 12-year pre-lease to a Fortune 100 enterprise tenant covering 6 megawatts at full lease-up, the sponsor financed through a specialty data center lender at SOFR + 425 (8.85 percent all-in), 70 percent LTC ($15.4M loan), with the pre-lease providing credit support for the take-out at stabilization. Construction took 22 months. Permanent take-out via life co at 6.85 percent fixed 10-year at month 25.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$20M Data Center Construction FAQ

Power infrastructure, cooling systems, redundancy (N+1 or 2N), security, and specialized building systems drive cost to $1,200 to $2,500 per square foot. Power capacity (5 to 15 megawatts typical for $20M scale) is the primary cost driver.

For favorable pricing, yes. Credit-tenant pre-leases (hyperscalers, Fortune 500 enterprises) materially affect lender appetite and pricing. Speculative data center construction is more expensive and has narrower lender bench.

Yes for credit-tenant pre-leased deals. Life cos quote construction-to-perm on data centers with strong tenant credit and long-term pre-leases.

Hyperscalers (Microsoft, Google, AWS, Meta) and major operators (Equinix, Digital Realty, Iron Mountain, Cyrus One) lead the market. Specialty lenders and life cos with data center expertise lead financing.

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Ground-up financing