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Parametrix's new white paper “The Impact of SLA Exposure on Data Center Valuation and Financing”, shows the impact of Service Level Agreement (SLA) penalties on an operating data center and why this risk is becoming an increasingly relevant factor in the underwriting of digital infrastructure assets.
The global surge in artificial intelligence and cloud computing is driving unprecedented demand for digital infrastructure, positioning data centers as one of the fastest-growing segments of the global economy. With analysts estimating that approximately $1.5 trillion in financing will be required over the next five years to build the capacity needed to support AI and cloud services, the sector is attracting increasing capital from institutional investors and lenders.
As development accelerates, however, data center owner-operators are facing new operational and financial pressures. Higher power density, increasing performance expectations from hyperscalers, and strict uptime requirements embedded in tenant contracts are raising the stakes for operational resilience. Many of these contracts include SLAs that require operators to provide tenant service credits, rent abatements, or other penalties if performance thresholds are breached. While these agreements reinforce operational discipline, they can also introduce meaningful financial volatility.
“As the scale of investment in AI infrastructure accelerates, the conversation around data center risk is evolving,” said Tsafrir Oranski, VP of Digital Infrastructure at Parametrix. “Investors and lenders are increasingly focused not only on physical infrastructure and tenant quality, but also on the stability of the income generated by these assets. SLA exposure can introduce volatility into that income stream, making it an important consideration in valuation and financing decisions.”
By stabilizing NOI and improving income predictability, this approach can support stronger financing outcomes and expand the pool of institutional capital willing to invest in the sector.
The paper also includes a financial use case illustrating how a single outage could reduce annual cash flow by more than 20-30%, highlighting the potential impact of SLA penalties on asset economics.
Download The Impact of SLA Exposure on Data Center Valuation and Financing White Paper
About Parametrix
Parametrix, the leading provider of digital business interruption solutions, specializes in parametric insurance that protects against the financial cost of technology and digital infrastructure downtime. Leveraging a proprietary network of monitoring systems, we collect and analyze real-time, granular data on the performance and availability of critical infrastructure— including data centers, SaaS providers, and cloud services— to accurately assess risk and deliver fast, transparent claims payments. Our solutions enable businesses, data center stakeholders, and (re)insurers to quantify, manage, and transfer the financial risks of downtime with unmatched precision. Parametrix is a Managing General Agent and Lloyd’s Coverholder, with policies backed by major A-rated global insurers, and is headquartered in New York.
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