The Bank of England has queried market participants about data center projects that are being financed without a tenant in place to pay rent.

The questioning is part of wider efforts to understand lending to the industry, according to people with knowledge of the matter. Loans to projects that start construction before an occupier agrees to lease the completed project are known as speculative financing in the real estate industry.

The institution is not against the speculative lending in principle, one of the people said, despite it being widely viewed as risky.

It’s one of a number of hazards in AI-related finance that the BOE has highlighted as it tries to guard against broader risks to the market. The supervisor began reviewing lending to the data center market last year after its rapid growth led to concerns about the interdependence of the firms involved.

The BOE declined to comment. Its Financial Policy Committee warned last month that AI-linked investments’ “increasing leverage, opacity and, at times, ‘circular arrangements’ that can be associated with this financing could complicate the assessment of risks and could amplify losses if expectations disappointed.”Anxiety about the vast amount of debt required to fund the rollout of AI has roiled markets in recent weeks, with some signs that investors are pushing back against lower quality projects. The Bayes UK Commercial real estate lending report, released last month, found four lenders had stopped lending to data centers. Owners of badly located and poor quality facilities are finding it particularly difficult to access suitable credit.

In contrast, debt funds provided almost half of speculative finance advanced in the first half of this year for alternative assets including data centers, the survey found, having expanded their activities in the space.

Data centers are seen as a potential driver of UK economic growth, but local opposition and long waits for grid connections have delayed projects. Private equity giant Blackstone Inc. is leading a £10 billion ($13.5 billion) data center project in the north east of England while Google opened a facility on the outskirts of London as part of a £5 billion investment in the UK.

Just this week, Brookfield Asset Management and the Qatar Investment Authority agreed to invest £2.5 billion ($3.4 billion) in a data center project with UK power generator Drax Group Plc.

Separately, the Bank for International Settlements recently warned that poor disclosure of deal terms, especially when data centers are leased to hyperscalers on long-dated contracts with exit options, creates a risk of the same asset being pledged multiple times.