The MEP-WS Lease finances the mechanical, electrical and plumbing (MEP) systems and white-space fit-out of a data center through a separate operating lease to the tenant, funded by long-term institutional capital priced on the tenant’s credit.
Built for mechanical, electrical, and plumbing for white-space fit-outs.
The developer can deliver a turn-key facility while funding and financing only the powered shell.
It replaces the conventional approach, in which the developer funds MEP and white space with equity and a construction loan and recovers the cost through a build-to-suit, yield-on-cost rent.
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The tenant signs a powered shell lease with the landlord and a separate MEP-WS Lease with the MEP-WS Lessor, a special purpose entity owned by the landlord.
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An MEP-WS Loan, placed with institutional investors and priced on the tenant’s credit, funds 100% of the MEP and white space cost. Proceeds are funded into escrow at lease execution and disbursed as the build progresses.
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MEP-WS Lease rent is set equal to the loan’s debt service every month and escalates with the powered shell lease. It passes straight through the lessor: the landlord keeps no spread and never funds a shortfall.
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The landlord can hold the tenant’s combined rent at a single turn-key yield on cost, adjusting powered shell rent to absorb the MEP-WS rent, or keep full powered shell rent with the MEP-WS Lease rent payable on top.
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The loan fully amortizes over the lease term. At expiry the obligation is retired and the lessor winds down, leaving nothing for the landlord to refinance.
Developers delivering turn-key facilities replace floating-rate construction funding of MEP and white space with fixed-rate term capital locked in at lease execution.
Developers who build and sell powered shells can offer tenants a turn-key product without new equity, sell the powered shell rent and retain the MEP-WS Lessor, keeping the asset in the powered shell investment market.
Sponsors developing several campuses at once reduce the equity and construction debt each site requires, freeing capacity for the next project.
Operators that fund their own MEP and white space as capital expenditure can shift that cost into an operating lease and redeploy the capital.
Owns the property and the MEP-WS Lessor
Occupies and operates the facility
Life insurers, banks, credit funds
The developer offers the full product while its capital and construction financing are sized to the shell.
Removing the largest cost component from the developer’s capital stack reduces the equity required and improves returns on the equity that remains.
Financing for MEP and white space is fixed when the lease is executed, removing construction-period rate exposure on that scope.
The tenant occupies a fully fitted facility with no upfront outlay and an operating lease in place of owned equipment.
Rent retires the loan over the lease term, with no refinancing risk or residual obligation for the landlord.
Share the occupier, the capacity and the fit-out budget, and we will show you how the MEP-WS Lease would work.
