Swedish firm Scandinavian Data Centers (SDC) has secured new investment to fund the development of its underground data center.

The company this week announced real estate group Fastighets AB Balder as a new long-term investor. Terms of the deal were not shared.

The investment will enable the construction of SDC’s first data center, located in Eskilstuna.

SDC CEO and co-founder Svante Horn said: “Balder’s investment catalyzes the development of our first data center and shows how digital infrastructure can be both future-proof and socially beneficial. We’re fully equipped to deliver a high-security facility where residual heat from the servers is recovered and can be fed into the local district heating network. At the same time, we’re helping to strengthen Sweden’s digital infrastructure – a priority that’s rapidly gaining importance.”

The data center is located in a 7,000 sqm (75,347 sq ft) underground facility launched in 1939 that was used as an aircraft engine factory and testing facility during World War II. SDC reportedly acquired the site several years ago, according to local press.

SDC previously said that for the past fourteen years, a smaller data center has been operated in the facility by one of the largest Nordic IT companies.

The planned expansion will “significantly increase” capacity – up to 10MW initially – and will include both traditional air-cooled and liquid-cooled data halls for higher IT loads. The company is reportedly targeting a 2026 completion date and an investment of two billion kroner ($186.8m)

Heat from the data center will be reused in the district heating system operated by Eskilstuna Energi & Miljö.

SDC’s sister company, Scandinavian Energy Centers, has launched a battery energy storage system (BESS) at the site.

“Data centers are an attractive, growing property segment, and we are very pleased to be part of this unique property development project,” Fastighets AB Balder said on LinkedIn.

SDC CEO Horn was previously co-founder of Rockan Data Center, which launched a data center in an underground former military facility near Linköping around 2015. He is also the founder of the investment management firm Two Towns Holding.

During World War II, Bolinder-Munktell, built Daimler-Benz DB601 airplane engines at the request of the Swedish authorities, with an underground factory at Eskilstuna constructed to accommodate the factory.

Fastighets AB Balder owns, manages, and develops residential and commercial properties in Sweden, Denmark, Norway, Finland, Germany, and the UK. The company’s property portfolio value totals SEK 222.6 billion ($22.8bn). Listed on the Nasdaq, the main owner of Fastighets AB Balder is Erik Selin Fastigheter AB.