Phoenix Infrastructure, the data center operator formed from Cyxtera Technologies and Evoque Data Center Solutions, is being the Centersquare Issuer and Centersquare Co-Issuer transactions that will sell $985 million in asset-backed securities to investors.
The transaction will issue notes through three tranches of classes A and B notes through two series of notes—Centersquare Issuer series 2025-1 and Centersquare Co-Issuer 2025-2, according to Kroll Bond Rating Agency.
Centersquare's notes will be repaid from revenues generated from 26 data centers. Ten of the multi-customer enterprise data centers are in eight markets, and 16 multi-customer enterprise data centers, located in 12 markets, will contribute leasehold interests, according to KBRA.
Among the deal's positive credit attributes are a low initial loan-to value (LTV) ratio, especially compared with other co-location data center ABS deals, says KBRA. Assets in the class A tranche have an original LTV ratio of 59%, and the class B notes have an LTV of 63%, according to the rating agency.
The deal also has a couple of triggers to help preserve cash and other real estate related expenses in the deal. If the three-month average debt service coverage ratio (DCSR) is less than 1.35x, then all excess cash will be deposited in the cash trap reserve until the situation is resolved. That is just the cash trapping trigger.
Centersquare also includes an expense reserve trigger. If the three-month average DSCR is less than 1.75x before amortization, then collections will be used to reserve 12 months of real estate and property taxes, fees, ground rents and other real estate-related expenses.
There is also a senior-subordinate payment schedule, where interest payments on the class B notes will be subordinate to principal payments on the class A notes, if the DSCR were to drop below a certain level, KBRA said.
The 2025-1 series, which will sell class A and B notes, are expected to repay in March 2030, and have a legal final maturity date of March 2055, KBRA said. The series 2025-2 notes, meanwhile, have an anticipated repayment date of March 2032, and with a shorter duration, have a legal final maturity date of March 2055.
As for the ratings, KBRA assigns A- and BBB- to the A and B tranches, respectively, of series 2025-1. It assigned A- to the class A tranche of the series 2025-2 notes.
