Blackstone’s AirTrunk seeks US$1.6bil loan for Singapore IPO

Singapore-based data center operator AirTrunk, owned by Blackstone Inc, is engaging banks to borrow approximately S$2 billion (US$1.6 billion) in an effort to finance the initial public offering (IPO) of a real estate investment trust (REIT) that leverages its assets. This loan, if finalized, will be utilized for acquiring assets from AirTrunk and refinancing existing debt.

The terms of the agreement remain undetermined and may undergo changes. Representatives for AirTrunk and Blackstone have not provided comment on the matter. The proposed REIT IPO in Singapore is anticipated to serve as a significant gauge for data center financing in Asia, where banks are increasingly reaching their sector limits and becoming more discerning in their lending decisions.

Data center loans across the region have risen to nearly US$29 billion since the start of last year, according to Bloomberg data. As demand continues to escalate, financial institutions are exploring innovative strategies to release more balance sheet capacity for additional lending, such as utilizing asset-backed bonds. Pursuing the IPO, AirTrunk can transfer certain assets into the REIT and raise capital from a broader investor base.

Blackstone's backing has enabled AirTrunk to attract substantial financing for data center expansions, including a recent US$2.3 billion green loan for a facility in Malaysia. Nevertheless, due to its association with Blackstone, many banks are still inclined to extend debt, despite rejecting smaller, less prominent operators. AirTrunk is anticipated to file confidentially for the REIT IPO in June.

Earlier in the year, different sources had indicated that the company aimed to raise around US$1.5 billion in the offering.