Enterprise data center developers Switch is preparing to sponsor a $659 million securitization of revenue from fee simple and leasehold interest in 10 of its data center properties across four states.
Switch ABS Issuer and ABS Co-Issuer, series 2025-2, will issue notes through four classes of class A and B notes, according to Morningstar | DBRS. The deal is the fourth transaction from the master trust platform and as part of this issuance another two properties will be added to the master trust, DBRS said.
Tranches A2-I, A2-II, A2-III and the class B notes have loan-to-value ratios of 51.9%, 63.2%, 73.4% and 83.7%, respectively, DBRS said, adding that the notes have a final distribution date of October 2055.
The properties are located in, according to DBRS.
Switch has a large national network of data center properties—located in Georgia, Michigan, Nevada and Texas—and holds more than 700 patents and patents pending for designs and operations in the space, according to DBRS.
Many of the deal's strengths rest with features of the data centers, according to the rating agency. Seven of the 10 properties, comprising 85.9% of the Morningstar DBRS year 1 revenue, maintain 2N redundancy, which bolsters uptime at its data center facilities, DBRS said. With 2N redundancy, multiple layers of systems must fail simultaneously to result in service outages and for uptime to be forfeited, according to the rating agency.
During 2024, the portfolio exhibited levels of power usage effectiveness (PUE) that ranged from 1.25 to 1.36, whereas LAS 4, a small legacy facility located in Las Vegas, exhibited a less efficient PUE of 1.93.
Switch was founded in 2000, and in addition to its many patents, has 20 operating properties in six metro areas. The company serves about 500 customers, according to a company statement. Also, Switch has focused on constructing highly redundant data centers, and since 2016 the centers have been powered by 100% renewable power, DBRS said.
The tenant pool is also highly diversified, with low turnover. The top 10 accounting for 51.8% of annualized revenue, DBRS said. Tenant changeovers amount to just 2.5% per year.
DBRS assigned AAA, AA, A and BBB to classes A2-I, A2-II and A2-III and class B, respectively.
