It's been more than a year since CyrusOne Data Centers sold securitization notes to investors, but this time the master trust offers a slightly larger offering, $575 million, from its pool of tenant leases on turnkey data centers in Northern Virginia and Texas.
Notes issued from CyrusOne Data Centers Issuer I, series 2025-1, will also be secured by real property interests, plus personal property and fixtures located on the data center properties, said S&P Global Ratings, the one rating agency assessing the deal.
The transaction offers just one class of notes, an A2 tranche with an A- rating. The notes have an anticipated maturity of five years, with a legal final maturity of 25 years, the rating agency said.
The underlying properties have a weighted average (WA) original lease term of 8.6 years, a debt service coverage ratio (DSCR) of 1.6x and a maximum loan-to-value (LTV) ratio of 70%, the rating agency said.
The Northern Virginia properties account for a large majority of the portfolio, 61.7%, and the assets have a weighted average (WA) cap rate of 8.0%, S&P said.
One of the deal's main credit strengths is that the real estate assets are protected by robust physical security, S&P said. Also, the equipment features a range of fiber connectivity and redundant power and cooling systems. Initial credit quality is also a plus, because 83.5% of the tenants have investment-grade credit ratings, said S&P.
Mitsubishi UFG Securities Americas and KKR Capital Markets are the transaction's arrangers, S&P said. KeyBank is the servicer, while Citibank is the indenture trustee.
The collateral underpinning CyrusOne, 2025-1's notes consists of real property interests in 13 data centers located in Northern Virginia, San Antonio and Houston. They have an appraised value of $4.4 billion, the highest comparable data center securitization deals. The properties underpinning CyrusOne's previous deal, the series 2024-2 and 2024-3, had an appraised value of $3.5 billion, the rating agency said.
Other differences were slight, including a higher number of data center campuses on the 2025-1 deal 13—compared to 11 on the series 2024-2 and 2024-3, but even that slight boost was enough to raise the aggregate appraised value, according to the rating agency. There were fewer tenants on the 2025-1 deal, though, 98 compared with 103 on the CyrusOne, series 2024-2 and 2024-3, S&P said.
