Sabey Data Center Properties is preparing to issue $435 million in securitized bonds secured by real property interests in seven U.S. data centers in four states.
The deal will issue just one class of notes, the class A2 tranche that is expected to have zero annual scheduled amortization, a seven-year anticipated repayment date, and a legal final maturity of 25 years, according to S&P Global Ratings. Aside from the property interests, the collateral includes personal property and fixtures that are part of the data centers, tenant leases, and the equity interest in each of the asset entities, according to S&P.
TD Securities is the arranger on the deal, which is expected to close on April 10. Midland Loan Services is a strong servicer evaluation ranking from S&P.
All those collateral assets are associated with the properties of seven hyperscale and retail enterprise data centers located in Washington, Virginia, New York and Texas, according to the rating agency, with Washington accounting for the largest number--four.
The rating agency notes that the current series of notes shares collateral with notes from several other transactions, including 2020-1, 2020-2, 2022-1 and 2022-2.
At closing, the Sabey 2025-2 will feature a $24.8 million liquidity reserve among other credit enhancement mechanisms. The deal also features cash trap and early amortization triggers. If the three-month average amortization debt service coverage ratio (DSCR) falls below 1.30x for any of the previous 12 months, then a class B payment-in-kind period will be in effect, where the class B notes will defer interest, S&P said.
The lease contracts securing the notes have relatively long average terms, with a weighted average (WA) remaining term of 7.6 years, and lease maturities are staggered, ranging from 2025 through 2041, the rating agency said. Tenants also have high average credit quality, as 74.4% of them are investment grade (at least BBB-).
