Connecticut Flags Data Center Risk Across Two Separate Allocations

What's New

Connecticut has named data center concentration as a risk running across two asset classes. The plan's infrastructure and real estate strategic reviews put data infrastructure at 17% of infrastructure NAV. The real estate review reports data centers at approximately 8%, held inside an "Other" category totaling 13%. Infrastructure goals state that "monitoring cross-portfolio risks (data centers across Real Estate and Infrastructure and Natural Resources) is an increased priority as sector concentrations grow." No combined figure appears in the materials.

Why It Matters

Investment committees that track sector concentration one asset class at a time will miss this. Real estate benchmarks against NCREIF, where data centers are not a named property type. Infrastructure benchmarks against CPI plus 400 basis points, which carries no sector view at all. A position can clear both reviews and still leave the plan holding one bet on hyperscaler credit and grid access, recorded in two places.

By The Numbers

• 12 to 18% proforma IRR range for data centers, the highest of any infrastructure sector listed. Renewables are shown at 9 to 10%.

• 300MW to 1GW hyperscale campus size, with data centers projected to take 9% of power consumption by 2030.

• 5 years or more of interconnection delay for new grid connections.

• 66% of infrastructure NAV concentrated in four sectors, data infrastructure among them.

Reality Check

The disclosure structure is where this gets difficult. The real estate property type chart names residential, industrial, office, retail, self storage and hotel. Data centers appear only in a footnote defining "Other," alongside seniors housing, entertainment and parking. The infrastructure chart names data infrastructure directly. Two taxonomies describe one exposure, and only one is visible to a reader scanning the charts. Connecticut has identified the problem and raised its priority, which is further than most plans have gone in public.

The Wrap

Data centers have become a cross-allocation position at Connecticut, and the plan is reporting it as a risk to monitor. The exposure works while hyperscaler leases hold, power arrives on contracted timelines, and returns land in the upper half of the stated range. It breaks if AI capital spending slows while campuses are mid-build, because both allocations mark down together. The 2027 pacing plans will show whether either asset class sets a cap.