Data center deals use five structures: sale-leaseback, powered shell, turnkey (build-to-suit), joint-venture co-invest, and the advisory fee arrangements that sit around them. The structure decides who funds the fit-out: a powered shell prices at roughly 35–45% of turnkey capex and rate (StackedAI analysis, Transaction Structures framework, Aug 2026), so the tenant funds the rest and holds the technology risk.
What are the main data center transaction structures?
In a sale-leaseback (SLB), a company that owns and occupies a data center sells it to an investor and leases it back, usually triple-net. In a powered shell lease, a developer delivers a building with utility power, substation capacity and fiber entrances, and the tenant installs the plant. In a turnkey or build-to-suit lease, the landlord delivers finished data halls and charges per kilowatt. In a joint-venture co-invest, a developer and a capital partner share equity in a property company that leases to an operating company. Around all four sit the advisory fee models that pay for sourcing, diligence and execution.
| Structure | Capital required from occupier | Control | Primary risk holder | Speed | Exit path |
|---|---|---|---|---|---|
| Sale-leaseback | None; occupier receives proceeds and pays rent | Occupier keeps operations; investor owns real estate | Investor holds tenant credit and residual risk; occupier holds a 15–16 year rent obligation (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026) | 8–16 weeks LOI to close (StackedAI analysis, engagement models framework, Aug 2026) | Investor sells a net-lease asset priced on tenant credit |
| Powered shell | Occupier funds fit-out; landlord funds shell at ~$3–5M/MW (StackedAI analysis, Transaction Structures framework, Aug 2026) | Occupier controls plant and operations; landlord controls land, structure and power contract | Landlord holds site and power risk; occupier holds fit-out and technology risk | Fast once power is secured; 10–20 year terms at hyperscale (StackedAI analysis, Transaction Structures framework, Aug 2026) | Landlord sells or recaps a single-tenant NNN shell |
| Turnkey / build-to-suit | Occupier pays monthly per kW; landlord funds ~$10–13M/MW (StackedAI analysis, Transaction Structures framework, Aug 2026) | Landlord controls plant; occupier controls IT | Landlord holds construction, obsolescence and re-leasing risk | Slowest; 36+ months for greenfield (StackedAI analysis, Tier-2 conversion thesis, Aug 2026) | Sold as an operating asset on development yield |
| JV co-invest | Shared between GP and LP in negotiated proportions | Negotiated major-decision rights; GP runs day to day | Shared pro rata; promote moves upside to GP | Adds negotiation time, then follows the underlying structure | Recapitalization or sale of PropCo interests |
How does a data center sale-leaseback work?
A sale-leaseback converts an owned data center into cash plus a long lease. The seller is usually a corporation, carrier or private-equity-owned business whose data center sits on the balance sheet as property and equipment; the buyer is a net-lease specialist, real estate fund or REIT that wants long-dated income with credit behind it. After close the seller controls operations exactly as before and the buyer owns the land, building and, in most cases, the plant. Under a triple-net lease the tenant pays taxes, insurance and maintenance, so the buyer takes tenant-credit and residual-value risk and the seller takes on a fixed rent obligation with escalators.
Term features are consistent across the class: fresh sale-leasebacks carry 15–16 year terms, escalators run 1.5–3.0% a year, and portfolios trade with a weighted average lease expiry of 6.7–9.1 years at acquisition (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026). The class is scarce: of 442 identified US NNN data center leases, only 35 remain after removing colocation, neocloud and hyperscaler tenants (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026). Pricing is covered at /data-center-sale-leaseback-cap-rates/ and the CFO-side decision at /sale-leaseback-vs-outright-sale-corporate-data-center/.
What is a powered shell lease and who uses it?
A powered shell is a building delivered with the things that take longest to obtain: the utility interconnection, substation or switchyard capacity, structural loading and fiber entrances. The tenant installs generators, UPS, switchgear, cooling and the data halls. Hyperscalers use shells to control their own plant design; the hyperscale norm is 100 MW to 1 GW on 10–20 year terms (StackedAI analysis, Transaction Structures framework, Aug 2026).
The capital split makes the structure work. A shell costs about $3–5M/MW against $10–13M/MW for turnkey, and prices at roughly 35–45% of turnkey capex and rate (StackedAI analysis, Transaction Structures framework, Aug 2026). A defense-focused REIT holding 31 single-tenant NNN shells totaling 5.9M SF in Northern Virginia for one Fortune 100 cloud tenant, with 24 of the 31 in joint ventures, is the clearest public template (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026). The line-by-line comparison is at /powered-shell-vs-turnkey-data-center-lease/.
What does a turnkey or build-to-suit lease include?
A turnkey lease delivers the complete facility, priced per kilowatt of critical load per month. The landlord funds construction and holds obsolescence and re-leasing risk; the tenant funds only its IT. Average asking rent for 250–500 kW requirements reached $195.94/kW/mo, up 6.5% year over year, with 3–10 MW deals up 12.5% (CBRE, North America Data Center Trends H2 2025, Feb 2026); large requirements price at $200+/kW/mo (CBRE via Data Center Frontier, Aug 2025). Underneath, construction cost reached $11.3M/MW in 2026, with AI fit-outs up to $25M/MW (JLL, 2026 Global Data Center Outlook, Jan 2026).
AI-era terms have converged on 15-year base terms with 3.0% escalators, as in a 245 MW, 15-year, $7.0B agreement signed in December 2025 (DCD, Dec 2025), often with a hyperscaler credit backstop such as one cloud provider’s backing of roughly $1.3B of lease obligations on a 168 MW site (TeraWulf press release, Oct 2025). Without a backstop, neocloud deals stall on credit (Data Center Knowledge, Apr 2026), which is developed at /nnn-data-center-lease-scarcity/.
How is a data center joint-venture co-invest structured?
A JV separates the property company from the operating company. PropCo owns the land, shell and power position and signs the lease; OpCo runs the compute and pays rent. A capital partner, typically an infrastructure fund or family office, funds most of the PropCo equity as limited partner; the developer serves as general partner, contributes a smaller share and earns a promote once the LP has received its preferred return. Major decisions require LP consent; operations stay with the GP.
Leverage depends on the tenant. StackedAI’s debt archetype is 60% debt at 7.5% with an anchor tenant and 55% debt at 9% without one (StackedAI analysis, Tier-2 conversion thesis, Aug 2026). Lenders price the same way: top-credit tenants attract spreads in the low 200 bps at up to 85% loan-to-cost, while non-credit tenants pay 200–300 bps wider at 70–80% loan-to-cost (JLL, North America Data Center Report Midyear 2026, Aug 2026).
The JV is also how capital recycles. Thirty-two data-center-focused infrastructure funds launched in 2025 (S&P Global Market Intelligence via DCD, Feb 2026), private equity accounted for 84% of deal value since early 2024 (Synergy Research via Data Center Knowledge, Feb 2026), and 62% of investors prefer opportunistic development to the 7% who prefer stabilized acquisitions (CBRE investor survey via Bisnow, Aug 2025). Waterfalls and control rights are set out at /data-center-joint-venture-co-invest-structure/.
How are data center transactions priced and financed?
Stabilized income is priced on cap rates and build risk on development yields. No verified 2026 data center cap-rate series has been published; figures vary by market, and StackedAI benchmarks these per engagement. The benchmarks in the lease universe are below.
| Benchmark | Figure | Source |
|---|---|---|
| Development yield, 15-year NNN with hyperscaler tenant | 7.5–8.5% | Alantra 2024 DC M&A Review, via StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
| Powered-shell portfolio cap rate (2020 sale) | 6.6% | Mapletree 2020, via StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
| 29-asset data center portfolio NOI yield (2021) | ~5.8% | dgtlinfra 2021, via StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
| Telco-credit NNN data center cap rates | 7.0–8.5% | StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
| All-property single-tenant net lease asking cap, Q1 2026 | ~6.80% (industrial 7.15%) | Boulder Group Q1 2026, via StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
| Escalators | 1.5–3.0% (AI-era 3.0%) | StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 |
Debt follows credit, on the JLL spread and loan-to-cost terms noted above. Single-asset single-borrower CMBS issuance for data centers reached $11.2B in 2025, an all-time high (CBRE, North America Data Center Trends H2 2025, Feb 2026). Data center ABS and CMBS outstanding grew from $4B in 2020 to $61B by mid-2026, with Barclays projecting $180B by year-end 2028; average deal sizes are about $600M for ABS and $1.2B for CMBS (Structured Finance Association, Research Corner, Jul 2026). A single AA-rated tenant on a 197-month NNN lease supported $8.4B of senior secured notes at 5.875% and 6.500% in 2026 (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026).
What is the four-rung value ladder for a site owner?
A site owner with a power position has four ways to monetize it, each adding capital, time and return (StackedAI analysis, Transaction Structures framework, Aug 2026):
- Sell the power. A PPA or tolling agreement monetizes the interconnection or generation without building.
- Powered land. Entitle the parcel, secure the utility agreement, sell or ground-lease the site.
- Powered shell. Build the structure and deliver power and fiber; the tenant fits out.
- Turnkey. Build and operate the complete facility.
The arbitrage is steepest at the second rung: farmland at $10–30K per acre becomes $200K–1M per acre once entitled with a utility agreement, and power-ready land in Ashburn exceeds $3.5M per acre; at roughly 3–4 MW per acre, entitled land equates to about $150–200K per MW (StackedAI analysis, Transaction Structures framework, Aug 2026).
The grid explains the value: primary-market grid waits exceed 4 years (JLL, 2026 Global Data Center Outlook, Jan 2026), new large-load requests average 4.4 years to power delivery (Cushman & Wakefield, 2026 Global Data Center Market Comparison, May 2026), and 300 MW or more within 36 months has become the top site-selection criterion (CBRE, 2026 US Real Estate Market Outlook: Data Centers, Jan 2026). Underwriting that position is covered at /how-private-equity-underwrites-data-center-power-risk/, and the on-site generation route at /energy-first-campus-development/.
How do data center advisory fees work?
Six engagement models cover most advisory work (StackedAI analysis, engagement models framework, Aug 2026):
- Retainer plus success fee. A monthly retainer with hours included, plus a fee at close.
- Sponsor-paid buy-side sourcing. A retained search for off-market targets, paid by the sponsor at close.
- Fixed-fee diligence. A scoped technical and commercial review, typically 3–6 weeks.
- Placement brokerage. A success fee on total contract value for capacity placements, for example 4% of TCV.
- Advisor seat. A retainer plus success-linked compensation for ongoing sponsor work.
- Equity kicker or co-invest. Fee reinvested as general-partner equity on sponsored deals, conceptually aligning the advisor with the outcome.
A fixed retainer with a modest close fee avoids the conflict in a pure success fee, where the advisor is paid only if the client transacts and so has an incentive to push a marginal deal across the line (StackedAI analysis, engagement models framework, Aug 2026).
The market gap is by deal size. Bulge-bracket buy-side mandates start at roughly $250M enterprise value, middle-market boutiques cover $50–250M, below $50M the field thins, and below $25M it effectively disappears (StackedAI analysis, Tier-2 conversion thesis, Aug 2026). A 1% retainer on a $20M acquisition is $200K (StackedAI analysis, Tier-2 conversion thesis, Aug 2026), which does not support a bank’s cost base but does support a specialist with an equity kicker, and it is where 7–25 MW conversions sit (StackedAI analysis, Tier-2 conversion thesis, Aug 2026). Creditable retainers and milestone fees are detailed at /data-center-advisory-fees-retainer-success-fee-equity-kicker/; the buy box is at /tier-2-brownfield-data-center-conversion/.
Key terms
- Sale-leaseback (SLB): a transaction in which an owner-occupier sells its property to an investor and leases it back on a long, usually triple-net, lease.
- Powered shell: a data center building delivered with utility power, substation capacity, structure and fiber entrances but without the tenant’s electrical and mechanical plant.
- Turnkey (build-to-suit): a lease in which the landlord delivers fully fitted, commissioned data halls and charges per kilowatt of critical load.
- Triple-net (NNN) lease: a lease under which the tenant pays property taxes, insurance and maintenance in addition to rent.
- PropCo/OpCo: the separation of the real estate owning entity (PropCo) from the operating business (OpCo), linked by a lease.
- Promote: the share of profits a general partner earns above its pro rata equity once the limited partner has received a preferred return.
- Equity kicker: an advisor’s participation in deal equity, typically by reinvesting fees as general-partner capital.
How StackedAI applies this
StackedAI maps every target it sources to a rung on the value ladder and a transaction structure before pricing it, because the same site is worth different amounts as powered land, shell and turnkey asset. For sponsors, the firm runs sponsor-paid sourcing and fixed-fee diligence in the 7–25 MW band that larger advisors do not cover (StackedAI analysis, Tier-2 conversion thesis, Aug 2026). For corporate owners, it frames the sale-leaseback against an outright sale on the site’s power position rather than its book value. Engagements use a fixed retainer with a modest close fee, as described at /advisory-services/.
Frequently asked questions
What is the difference between a powered shell and a turnkey data center lease?
A powered shell is a building with utility power, substation capacity and fiber entrances; the tenant installs the plant. A turnkey lease delivers finished data halls priced per kilowatt. A shell prices at roughly 35–45% of turnkey capex and rate, about $3–5M/MW against $10–13M/MW (StackedAI analysis, Transaction Structures framework, Aug 2026).
What lease term and escalators are typical in a data center sale-leaseback?
Fresh sale-leasebacks carry 15–16 year terms with 1.5–3.0% annual escalators, and portfolios trade with a weighted average lease expiry of 6.7–9.1 years at acquisition (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026). AI-era leases use 15-year base terms with 3.0% escalators, often with a hyperscaler credit backstop.
What cap rate does a data center sale-leaseback trade at?
No verified 2026 data center cap-rate series has been published. Benchmarks in StackedAI’s lease universe include a 6.6% cap on a powered-shell portfolio (2020), a ~5.8% NOI yield on a 29-asset portfolio (2021), telco-credit NNN caps of 7.0–8.5%, and a single-tenant net lease asking cap of ~6.80% in Q1 2026 (StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026).
How is a data center joint-venture co-invest structured?
A property company owns the land, shell and power position and leases to an operating company that runs the compute. A capital partner funds most of the equity as limited partner; the developer is general partner and earns a promote above a preferred return. With an anchor tenant, StackedAI’s debt archetype is 60% debt at 7.5%; without one, 55% at 9% (StackedAI analysis, Tier-2 conversion thesis, Aug 2026).
How much do data center advisory fees cost?
Most engagements combine a monthly retainer with a success fee at close. Bulge-bracket buy-side mandates start near $250M enterprise value, boutiques cover $50–250M, and below $25M the field effectively disappears. A 1% retainer on a $20M acquisition is $200K (StackedAI analysis, Tier-2 conversion thesis, Aug 2026), so smaller deals rely on fixed retainers plus equity participation.
Sources
- StackedAI analysis, Transaction Structures framework, Aug 2026 (internal)
- StackedAI analysis, engagement models framework, Aug 2026 (internal)
- StackedAI analysis, Tier-2 conversion thesis, Aug 2026 (internal)
- StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 (internal; incorporates Alantra 2024 DC M&A Review, Mapletree 2020, dgtlinfra 2021, Boulder Group Q1 2026)
- JLL, North America Data Center Report Midyear 2026, Aug 2026, https://www.jll.com/en-us/insights/market-dynamics/north-america-data-centers
- JLL, 2026 Global Data Center Outlook, Jan 2026, https://www.jll.com/en-us/insights/market-outlook/data-center-outlook
- CBRE, North America Data Center Trends H2 2025, Feb 2026, https://www.cbre.com/insights/books/north-america-data-center-trends-h2-2025
- CBRE, 2026 US Real Estate Market Outlook: Data Centers, Jan 2026, https://www.cbre.com/insights/books/us-real-estate-market-outlook-2026/data-centers
- CBRE via Data Center Frontier, Aug 2025, https://www.datacenterfrontier.com/colocation/article/55312558/two-lenses-on-one-market-jll-and-cbre-show-data-centers-in-a-pinch
- CBRE investor survey via Bisnow, Aug 2025, https://www.bisnow.com/national/news/data-center/untapped-opportunity-data-center-asset-sales-slump-even-as-new-development-booms-130597
- Structured Finance Association, Research Corner: How Data Center ABS and CMBS Fit in a Broader Financing Ecosystem, Jul 2026, https://structuredfinance.org/wp-content/uploads/2026/07/SFA-Research-Corner_How-Data-Center-ABS-and-CMBS-Fit-in-a-Broader-Financing-Ecosystem.pdf
- S&P Global Market Intelligence via DCD, Feb 2026, https://www.datacenterdynamics.com/en/news/sp-global-data-center-ma-topped-69bn-in-2025-neoclouds-in-unenviable-position/
- Synergy Research via Data Center Knowledge, Feb 2026, https://www.datacenterknowledge.com/investing/data-center-m-a-outlook-robust-in-2026-despite-power-ai-risks
- Cushman & Wakefield, 2026 Global Data Center Market Comparison, May 2026, https://ir.cushmanwakefield.com/news/press-release-details/2026/Dallas-Texas-Ranked-No–1-Primary-Data-Market-in-the-World-as-AI-Demand-Power-Constraints-and-Regulation-Reshape-CRE-Strategy/default.aspx
- DCD, Hut 8 signs 245MW capacity deal with Fluidstack, Dec 2025, https://www.datacenterdynamics.com/en/news/hut-8-signs-245mw-capacity-deal-with-fluidstack-as-part-of-multi-gigawatt-partnership-with-anthropic/
- TeraWulf press release, Oct 2025, https://investors.terawulf.com/news-events/press-releases/detail/121/terawulf-expands-strategic-partnership-with-fluidstack-through-new-168-mw-ai-compute-joint-venture
- Data Center Knowledge, Neocloud storm gathers as data center deals stall over credit risk, Apr 2026, https://www.datacenterknowledge.com/cloud/neocloud-storm-gathers-as-data-center-deals-stall-over-credit-risk