Meta owns 20%, and funds managed by Blue Owl own the other 80%. Last month, a holding company called Beignet Investor, which owns the Blue Owl portion, sold a then-record $27.3 billion of bonds to investors, mostly to Pimco.
Meta said it won’t be consolidating the joint venture, meaning the venture’s assets and liabilities will remain off Meta’s balance sheet. Instead Meta will rent the data center for as long as 20 years, beginning in 2029. But it will start with a four-year lease term, with options to renew every four years.
This lease structure minimizes the lease liabilities and related assets Meta will recognize, and enables Meta to use “operating lease,” rather than “finance lease,” treatment. If Meta used the latter, it would look more like Meta owns the asset and is financing it with debt.
The favorable accounting outcome hinges on some convenient assumptions. Some appear implausible, while others are in tension with one another, making the off-balance-sheet treatment look questionable.
This lease structure minimizes the lease liabilities and related assets Meta will recognize, and enables Meta to use “operating lease,” rather than “finance lease,” treatment. If Meta used the latter, it would look more like Meta owns the asset and is financing it with debt.
The favorable accounting outcome hinges on some convenient assumptions. Some appear implausible, while others are in tension with one another, making the off-balance-sheet treatment look questionable.
https://www.wsj.com/tech/meta-ai-data-center-finances-d3a6b4...