Data center securitizations continue with Compass Datacenters Issuer III LLC and L.P., which will sell $885 million in asset-backed securities (ABS) through two series of notes, 2025-1 and 2025-2, respectively.
The transactions are secured by revenues from real estate and tenant lease payments on three data centers. Two of the facilities are in Phoenix and a one is in Toronto, says S&P Global Ratings. Collateral also includes personal property and fixtures, plus equity interest.
Compass Datacenters 2025-1 and 2025-2 will be the first two sales from a new master trust. It will not cross-collateralized assets or defaults with Compass' existing master trust, according to S&P. The series 2025-1 notes, secured by the U.S. properties, are expected to repay by 2030, while the notes collateralized by the Toronto property are expected to mature in 2032. All notes have a legal final maturity date in 2050.
Guggenheim Securities is sole structuring advisor on the deal. It is familiar territory for the firm, since it also served as arranger on the recent Sabey Data Center Issuer, 2025-1. Compass is expected to close on February 19, according to S&P.
Compass Datacenters gets credit protection from a liquidity reserve account of about $11.3 million at closing. Also, three-month average class A senior debt service coverage ratios (DSCR) of 1.45x and 1.25x, drive cash trap triggers, providing another layer of protection.
All the data center tenants are hyperscale, which usually require 2,000 kilowatts or more of capacity to run. They use computing equipment and networks on hundreds of racks. This gives them enough space not to have to share allotted space with other customers.
Also, all the leases are turnkey, where the manager owns the critical mechanical and electrical infrastructure and provides space, power and cooling systems and physical security. Tenants manage all other aspects of computing infrastructure.
S&P assigns A and A- to the 2025-1 A2 and A3 classes, respectively. Series 2025-2, class A2 gets an A rating.
