Data center provider Cologix US is preparing a $1.1 billion securitization of revenue from 17 properties that serve 1,064 customers across the U.S. and Canada. This is Cologix’s first securitization.
Deutsche Bank Securities is the sole structuring advisor and joint bookrunner on the transaction, KBRA said. The transaction will issue notes through four classes. The deal benefits from credit enhancement from overcollateralization, subordination, a senior interest reserve account and excess spread.
Also, the Cologix 2021-1 notes benefit from a performance trigger. If the three-month average debt service coverage ratio (DSCR) is less than 1.35x, then 100% of excess cash will be deposited in the Cash Trap Reserve until the DSCR issue is resolved. If the DSCR is less than 1.2x, then all of the excess cash will be applied to repay the class A and class B notes of all series until the condition is resolved, KBRA said.
Twelve entities on the transaction will own the data centers and their securitized assets, KBRA said.
Notes will be issued from the Cologix Data Centers US Issuer and Cologix Data Centers US Co-Issuer, in a transaction known as Cologix 2021-1, according to Kroll Bond Rating Service.
Revenue from 12,155 billing items, plus fee simple ownership interests in six multi-customer enterprise data centers located in four markets, and leasehold interests in 11 multi-customer enterprise data centers in four markets, KBRA said.
The diverse customer base, while concentrated in technology, represents a wide range of industries and revenue sources. Clients in the cloud services industry, including web services, account for 25.6% of Cologix’s total annualized revenue, the company’s two largest revenue sources. The other top five areas of revenue include backbone carrier (8.3%), banking and lending services (7.4%), and large enterprises (7.1%).
KBRA noted that Cologix operates 37 data centers. Growing technology requirements that support a workforce working from home, plus online shopping and entertainment are driving demand for data centers. In 2020 data center demand in the 14 major U.S. markets totaled 604.4 megawatts, a 72.9% increase over the 349.6 MW reported in 2019, KBRA said citing commercial realty expert Jones Land LaSalle. As new variants continue to emerge from the prolonged COVID-19 pandemic, data centers have been relatively resilient to early economic dislocations, and society has only become increasingly dependent on digital and virtual services, KBRA said.
