Recurring revenue from a portfolio of 32 data centers will support $815 million in asset-backed securities (ABS) from three series of notes through the Centersquare Issuer and Centersquare Co-Issuer, series 2025-3 and 2025-4.
The assets collateralizing the securitized notes, all of which are fixed rate, are composed of multi-customer enterprise data centers, 16 of which are fee simple ownership interests and 16 of which are leasehold interests, according to analysts at the Kroll Bond Rating Agency.
The properties financed through ownership interests account for most of the collateral pool's annualized adjusted net operating income (AANOI), 63.8%.
Like Centersquare series 2025-1 and 2025-2, the series 2025-3 and 2025-4 notes will be issued from a master trust. New contracts can be added to the collateral pool, increasing revenue collections over time, but those additions would only be allowed under certain conditions.
As of August 8, the cutoff date for the collateral pool, the portfolio was highly fragmented by customer, with 1,303 unique clients, KBRA said. Also, the largest customer accounts for 6.5% of annualized monthly recurring revenue (AMRR). The top 20 customers in the account, also make up 41.7% of AMRR. The single largest data center, by AANOI, accounts for 10.1% of the pool.
TD Securities is the lead structuring advisor, according to the rating agency. Phoenix Infrastructure is the manager on the deal, while Trimont is on the deal as servicer and back-up manager.
KBRA assigns A- to the A2 notes of the 2025-3 and 2025-4 notes; and BBB- to the 2025-3 class B notes.
Centersquare's deal structure includes debt service coverage ratio (DSCR) performance triggers. If the deal's three-month average DSCR is less than 1.35x, then 100x of excess cash will be deposited into the cash trap reserve account until the condition cures.
Also, the senior notes have an interest and expense reserve sub-account that will be funded at closing, equivalent to about six months of class A notes interest and commitment fees for all the series. If there is any excess, it will be transferred to the collections account, KBRA said.
