CyrusOne Data Centers Issuer is preparing another issuance of asset-backed securities from a master trust set up to securitize a pool of tenant leases and other revenue from six data centers, raising $488 million.
The series 2023-2 will issue one tranche of notes from the master trust, an A2 class that has a legal final maturity of 25 years, according to ratings analysts from S&P Global Ratings. CyrusOne Data Centers Issuer, 2023-2 is slated to close on November 22, with almost the same line up of managers that appeared on the first deal, according to Asset Securitization Report's deal database.
Barclays, Citigroup Global Markets, Goldman Sachs and Wells Fargo Securities are managers on the deal, according to the database, while S&P notes that KKR Capital Markets is another arranger.
S&P assigns an 'A-' rating to the class A2 notes, according to the rating agency, which also points out that they expect the notes to mature in five years.
The current deal has a number of differences from the first series of notes that wind up as credit strengths to the deal. CyrusOne Data Centers Issuer 2023-2 adds a property in Virginia, according to S&P, a state that accounts for a large portion of data center locations. The added property has an original term of 12.5 years and remaining term of 8.2 years.
All of the data centers are turnkey facilities, in another positive. At turnkey data centers the landlord owns the critical mechanical and electrical infrastructure. Heavy security patrols the facilities, which are equipped with diverse fiber connectivity and redundant power and cooling systems, S&P said.
The quality of the tenants leasing space at the facilities is another plus. Some 77.2% of tenants behind the underlying leases are investment-grade rated, according to S&P. Also, the leases in the collateral pool have staggered maturities. Expiration dates range from 2023-2034, S&P said.
Despite the deal's long list of positive credit characteristics, S&P did raise some concerns as well. The tenant mix is a bit concentrated, with one tenant accounting for 56.7% of the pool's total annualized adjusted base rent (AABR). Also, the pool's top five tenants account for 88.3% of total AABR.
