Compass Datacenters is preparing a deal to raise $326 million in fixed-rate debt from securitization investors to fund the first five data centers of a larger 10-building complex that is being built for one hyperscale occupant.
The five properties collateralizing the leases in Compass Datacenters Issuer II's data pool were completed between 2024 and 2025, according to Morningstar DBRS. The notes will be issued through one A-1 tranche, which DBRS rates (P) AAA (sf), and are slated to have a final distribution date of November 2050.
This is the fourth note issuance from the Compass Datacenters master trust have a loan-to-value ratio of 70.6%, the rating agency said.
The data centers are in Red Oak, Texas, about 20 miles south of Dallas, and are heavily powered with 180 megawatts (MW) of critical IT load and feature redundancies in place for all building systems associated with the deal.
Guggenheim Securities is the structuring advisor on the deal, DBRS said.
The rating agency puts a net present value discount rate of 7.75% on the properties in the deal, plus a loan-to-value (LTV) ratio of 84.8%. The assets also have a debt yield of 8.26% and a debt service coverage ratio (DSCR) 1.52%.
In terms of asset fundamentals, the high-quality tenant committed to a 15-year lease with maturity dates through various end dates in 2040. That includes 2.0% annual rent increases, plus three extension options that can extend the original lease term to 30 years, DBRS said.
On top of the base rent, the tenant must pay ETF Opex Element, an amount that equals the tenant's pro rata share of operating expenses for the six months immediately after early termination.
That the five properties are new is another credit strength, according to DBRS. Each of them has a critical IT load of 36 megawatts. They are also modular in their construction, allowing them to carry more power—they can go up to 50 megawatts with the power provider, Oncor.
Data centers have complex operational requirements, to meet very high uptimes and reliability standards, DBRS said. This gives the sector a high barrier to entry,
In addition to high upfront capital costs and power infrastructure needs, DBRS said.
Some concerns are at play, though, including the single, investment-grade tenant that will occupy the five buildings.
Also, at least some other operators have managed to get behind Dallas' high barrier to entry datacenter market. As of 2025, about 1,000 MW of new capacity is under construction, with 4 gigawatts of capacity planned.
