TL;DR · 30-second read
The Short Version
A big investment firm, Ares, has now committed more than $500 million to Sabey, a company that owns and runs data centers. Data centers are the warehouse-sized buildings full of computers behind apps, cloud storage and artificial intelligence.
The surprising part: Ares did not buy the company. It owns a minority slice, and the founders stay in charge alongside a union pension fund.
Sabey’s buildings are sized for roughly as much electricity as 200,000 homes use, and it plans to nearly triple that by 2033. This deal shows one way owners raise huge sums without selling out.
Ares Secondaries funds have expanded their minority equity stake in Sabey Data Center Properties, bringing their total commitment above $500 million, Global Data Center Hub reported on October 10, 2026. The follow-on builds on a stake first announced in July 2026, and the size of the new tranche was not disclosed. Sabey Data Center Properties is a joint venture between Sabey Corporation and National Real Estate Advisors, which manages money for the National Electrical Benefit Fund, a union pension trust. The founding partners keep control.
The platform owns and operates 275 megawatts (MW, a measure of how much electricity a site can draw) across US markets and expects its pipeline to reach about 737MW by 2033. In the same week, TeraWulf and Applied Digital described very different funding routes in filings with the SEC: TeraWulf said it intends to upsize its secured credit facility and raise more secured debt to back its utility power commitments, while Applied Digital reported closing $1.59 billion of senior secured notes.
Executive Summary
Ares Secondaries funds have now committed more than $500 million to Sabey Data Center Properties in two steps, in July and again in October 2026, without taking control. Sabey Corporation and National Real Estate Advisors still run the platform. Neither the latest tranche, Ares’s ownership percentage nor the implied valuation has been disclosed.
The structure is the story. Sabey operates 275MW and expects about 737MW by 2033, which leaves roughly 460MW still to fund and build. The usual options for financing growth on that scale are to sell the company, borrow against contracted projects, or sell minority slices. Sabey has taken the third route, and it now has a secondaries fund and a union pension trust sharing the same platform.
Set against TeraWulf’s and Applied Digital’s October filings, the deal shows that AI-era data center capital now comes in at least three distinct forms. These are project-level secured debt backed by long leases, secured debt raised to guarantee utility power deals before any tenant signs, and patient minority equity in an operating platform. Each carries different costs and different risks for the people who build and power these sites.
What $500 Million Buys When It Doesn’t Buy Control
The core fact is simple. An investor has committed more than $500 million to Sabey’s platform over roughly three months and still holds only a minority position. Sabey Corporation and National Real Estate Advisors remain in charge of strategy, site selection and customer relationships. For an operator, that is the trade on offer: take in a very large check and keep control of the business.
The scale of what Sabey plans explains why the trade matters. Going from 275MW in operation to about 737MW by 2033 means adding roughly 460MW, which is about 1.7 times what the platform runs today, over about seven years. An expansion of that size usually forces one of three choices. The owners can sell the company outright, borrow heavily against individual projects, or sell slices of the platform to outside investors. This deal is the slice route, and the fact that Ares came back for a second tranche shows the route can attract nine-figure money more than once.
The investor’s side of the trade is different from backing a greenfield project. A greenfield project is a new campus on undeveloped land, where the money pays for plans, permits and a power request. An investor in Sabey instead gets exposure to 275MW of capacity that already exists and operates, plus a share of the pipeline. Several groups are affected. Founder-led and family-controlled operators get a template for raising institutional money without an exit. Pension investors such as the National Electrical Benefit Fund gain a large co-investor. Operators that sold outright to fund growth now have a visible point of comparison.
Three Capital Stacks in One Week
Applied Digital’s October 7 earnings release, filed as an exhibit to an 8-K, shows the debt route. During its fiscal first quarter the company closed $1.59 billion of 7.000% senior secured notes due 2031. They were issued at par through a subsidiary, APLD ComputeCo 3 LLC, to fund a third 150MW building at its Polaris Forge 1 campus in North Dakota and to repay a $300 million bridge loan. The same release cites a 210MW, 15-year lease at Delta Forge 2 with a tier-one, investment-grade hyperscaler, meaning one of the giant cloud companies. Applied Digital puts that lease at about $5.2 billion of base-term contracted revenue. Long leases with creditworthy tenants are what make fixed-coupon borrowing at that scale possible.
TeraWulf’s October 5 8-K shows a different pressure point: power now has to be financed before a building rises. Alongside doubling its contracted capacity with Kentucky Power, TeraWulf said it intends to upsize its existing senior secured revolving credit facility. It is also seeking more senior secured debt to support letter of credit needs tied to its long-term power development partnerships with utilities. A letter of credit is a bank guarantee that pays the utility if a developer walks away from infrastructure built on its behalf. The filing adds that there can be no assurance the financing will close.
Sabey’s equity sits at the other end of the spectrum. Equity carries no fixed coupon and no repayment date, so the platform does not have to meet interest payments on it. The cost is ownership: Ares shares in the upside of the business. Debt suits individual projects with signed leases. Minority equity suits a platform that has buildings in operation, under construction and still on paper at the same time.
Why a Secondaries Fund, and Why Twice
Secondaries funds have traditionally bought existing stakes from other investors or put money into assets that are already up and running, rather than backing start-ups. That profile fits an operator with 275MW in service better than it fits a developer with a power contract and an empty site. Its long-dated pension partner points in the same direction. A union pension trust is investing for retirements decades away, which aligns with data center leases measured in years rather than quarters.
The follow-on matters more than the headline figure. Committing more capital a few months after the first stake suggests continued conviction, although the undisclosed tranche size and valuation mean outsiders cannot judge the price Ares paid. One follow-on investment also does not establish an industry-wide shift. It shows that minority capital can reach this scale in one well-established platform. Whether it can carry the whole 460MW buildout without a sale or heavy borrowing remains an open test.
The Risk Is Shared, Not Removed
Minority equity changes who carries the risk, not what the risk is. TeraWulf’s filing illustrates the dependencies every pipeline faces. Bringing Muskie’s second 500MW phase forward from 2030 to 2029 is subject to Kentucky Public Service Commission approval and Kentucky Power’s construction schedule. That schedule includes a new 765-kV / 345-kV substation that Kentucky Power is developing to serve the site. Sabey’s remaining 460MW will run into its own versions of those gates, including utility upgrades, regulatory approvals and equipment lead times.
Developers are working to limit how much capital they put at risk before those gates clear. Applied Digital described its Finland agreement for up to about 1GW of potential power as offering long-term potential ‘while limiting the Company’s initial exposure.’ Selling minority stakes is another version of the same discipline. Ares now shares construction and power risk on Sabey’s pipeline in proportion to its stake, without steering the decisions that determine how that risk plays out.
Background
Sabey Data Center Properties is a joint venture between Sabey Corporation and National Real Estate Advisors, the manager of money for the National Electrical Benefit Fund, a union pension trust. The platform operates 275MW across US markets and targets about 737MW by 2033. Ares Secondaries, part of the alternative investment manager Ares, first took a minority stake in July 2026.
The investment lands in a market where demand for AI computing has made power, permits and capital the gating inputs for new data centers. Developers increasingly sign utility agreements years before a building opens. TeraWulf, which also operates bitcoin-mining infrastructure at its Lake Mariner campus in New York, acquired the Muskie site in Kentucky in May 2026. Applied Digital, based in Dallas, runs AI-focused campuses in North Dakota and recently took its first step abroad with a Finland power agreement. Source: DayOne’s Nasdaq Filing, TeraWulf’s 1GW Pact, Ares’s $500M+ Sabey Stake — Global Data Center Hub’s October 10, 2026 weekly roundup of data center transactions, including Ares’s expanded stake in Sabey Data Center Properties. Primary sources: Applied Digital Form 10-Q for the quarter ended August 31, 2026 (filed October 7, 2026); Applied Digital Form 8-K (filed October 7, 2026); Applied Digital Reports Fiscal First Quarter 2027 Results (Exhibit 99.1); TeraWulf Form 8-K (filed October 5, 2026); TeraWulf Expands Contracted Power Capacity at its Muskie Data Campus to 1 GW (Exhibit 99.1).Sources