Underwriting Memo

Investor Due Diligence for Data Center Projects

Pressure test whether a data center project still underwrites after downside cases on power cost, build timing, utilization, and chip packaging constraints. Review the outputs that matter to investment committees, lenders, and development partners before capital is committed.

For investors, with secondary relevance for lenders and development partners evaluating a specific project.

Does this data center project still underwrite after downside testing power cost, build timing, utilization, and chip packaging constraints?

Sample underwriting memo output

Review one sample downside summary and the memo outline used to explain investment risk to committees, lenders, and development partners.

Illustrative downside summary for Investor Due Diligence for Data Center Projects

Sample project

Brownfield expansion with utility, supply, and utilization downside tests.

Base case NPV
$184M

Illustrative sample output before downside stress-testing.

Base case IRR
18.7%

Shown alongside the utilization and power assumptions behind the case.

Payback period
6.4y

Useful for comparing build timing delays and contracted revenue coverage.

DSCR floor
1.26x

Highlights where financing assumptions or downside cases threaten lender comfort.

Sample memo outline

  1. 1.Project scope, capital stack, and underwriting assumptions.
  2. 2.Downside cases on power cost, build timing, utilization, and packaging supply.
  3. 3.Returns sensitivity across NPV, IRR, payback, and debt coverage breakpoints.
  4. 4.Decision summary on what would need to change before the project still underwrites cleanly.

What we test

  • downside cases on power cost
  • build timing and schedule delay
  • utilization risk
  • chip packaging and supply constraints
  • sensitivity to financing assumptions when relevant to the underwriting view

What the memo includes

  • an underwriting memo for a specific project or opportunity
  • decision-ready outputs such as NPV, IRR, payback, and debt coverage under downside assumptions
  • the assumptions and breakpoints most likely to change the investment case

Underwriting Memo

Does this data center project still underwrite after downside testing power cost, build timing, utilization, and chip packaging constraints?

Preview the variables behind the memo

These cards show the outcome measures, conditions, and levers reviewed in the underwriting memo.

KPI cards

Project NPV (Net Present Value)
Net Present Value of program cash flows at the analysis WACC; includes build, operations, and exit/residual.
Insufficient sampleComputedConfidence 77%Higher is better
Project IRR (Internal Rate of Return)
IRR computed on project cash flows over the analysis horizon.
CurrentUnknownConfidence 89%Higher is better
Payback Period
Elapsed days from first capital outlay to cumulative cash neutrality.
Insufficient sampleEstimatedConfidence 81%Higher is worse
Risk‑Adjusted Valuation Index
Expected NPV under Monte‑Carlo, normalized to 0–1 for comparability.
CurrentUnknownConfidence 67%Higher is better
Debt Service Coverage Index
Covenant‑aware DSCR mapped to 0–1 for teaser use (1.0 at or above target).
StaleDirectConfidence 72%Higher is better

Key conditions behind the underwriting view

Installed Power Capacity
Commissioned electrical capacity available to the program.
Insufficient sampleQualitativeConfidence 90%Higher is better
Accelerator Installed Base
Cumulative installed compute accelerators available for revenue.
StaleInferredConfidence 88%Higher is better
PPA Hedge Coverage
Share of forecast MWh hedged under Power Purchase Agreements (PPAs) or equivalent instruments.
Not availableDirectConfidence 74%Higher is better
Supply Lock‑In Ratio
Share of required accelerator capacity under firm orders or long‑term agreements.
CurrentDirectConfidence 68%Higher is better
Packaging Bottleneck Index
0–1 index of packaging tightness (HBM, CoWoS) affecting accelerator deliveries and yields.
CurrentEstimatedConfidence 86%Higher is worse
Interconnection Queue Delay
Effective days of delay from grid interconnection studies and upgrades.
CurrentProxyConfidence 68%Higher is worse
Power Price
Effective electricity cost per MWh (blended tariffs, PPAs, hedges, imbalance).
CurrentInferredConfidence 69%Higher is worse
Average Utilization
Delivered compute‑hours as a percent of available compute‑hours for revenue.
CurrentInferredConfidence 89%Higher is better
Site Readiness Index
Composite 0–1 score of permitting, substation/cooling readiness, and critical path clearance.
Insufficient sampleDirectConfidence 69%Higher is better
Contracted Revenue Coverage
Share of next‑12‑month revenue covered by executed contracts.
CurrentUnknownConfidence 64%Higher is better

Assumptions and levers that shift the memo

CAPEX Spend Plan
Planned capital outlays by month for land, power, cooling, and compute.
Utilization Target
Policy target for average utilization used in planning and pricing.
Insufficient sampleUnknownConfidence 51%Higher is better
PPA Hedge Target
Policy target for share of load to hedge with PPAs or equivalent instruments.
Insufficient sampleInferredConfidence 61%Higher is better
Leverage Ratio
Debt as a share of total capitalization at financial close.
CurrentProxyConfidence 85%Higher is worse
Brownfield Site Share
Share of capacity placed at brownfield locations (vs. greenfield) to reduce permitting risk and time.
StaleEstimatedConfidence 81%Higher is better
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