Centersquare Data Center Notes Receive Preliminary Ratings
Preliminary Ratings Assigned by KBRA to Centersquare Series 2024-1 and 2024-2
KBRA, a prominent credit rating agency, has recently assigned preliminary ratings for the Series 2024-1 and Series 2024-2 notes, which are integral to the financial structure of Centersquare Issuer LLC and Centersquare Co-Issuer LLC. This marks a significant step for the company, as these notes are part of an innovative asset-backed securities (ABS) transaction focused on colocation data centers.
Understanding the Centersquare ABS Transaction
The Centersquare Series 2024-1 and Series 2024-2 notes are backed by a collection of 21 data centers, which are pivotal in generating substantial revenue. As of the designated reporting date, these centers collectively yield approximately $295.1 million in Total Annualized Monthly Recurring Revenue (AMRR) and about $114.0 million in Annualized Adjusted Net Operating Income (AANOI). These centers encompass a mix of fee simple ownership and leasehold interests spread across various markets, demonstrating a robust investment in data center capabilities.
Data Centers and Their Services
The 21 data centers contribute significantly to customers’ operational needs, offering essential services for power, space, and cooling for data center equipment. As of the reporting date, the facilities cater to 854 unique customers, each bound by individual contracts with an impressive average remaining term of 4.5 years. Among these customers, the largest 20 account for approximately 47.6% of the recurring revenue, showcasing the importance of these key relationships.
Industry Distribution and Customer Profile
The customer base is diverse, spanning 15 different industries. Notably, the leading industries include cloud and IT services, making up 44.1% of AMRR, followed by banking and securities at 18.2%, and network service providers at 12.6%. This diversity not only enhances revenue stability but also mitigates risks associated with industry fluctuations.
Operational Capacity and Technological Advantages
The operational capacity represented by these data centers is impressive, incorporating around 809,358 square feet of data center space and providing roughly 106.2 megawatts of critical load power. This setup is designed to cater to the increasing demand for efficient data services, with cloud computing and digital infrastructures becoming ever more vital to business operations across the globe.
Methodologies Used in Rating Assessment
KBRA's assessment employed several methodologies tailored specifically to the asset-backed securities sector. These methodologies help define how risks are mitigated and opportunities for growth are identified within the structured finance landscape. Understanding these methodologies ensures that stakeholders are aware of the critical factors influencing the ratings.
Insights into KBRA
Kroll Bond Rating Agency, LLC (KBRA) stands out as a full-service credit rating agency, registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). With global recognition, KBRA’s commitment to credit ratings helps provide a clearer picture of financial health in various sectors, including the burgeoning asset-backed securities market.
Frequently Asked Questions
What are the Centersquare Series 2024-1 and 2024-2 notes?
These notes are part of a colocation data center ABS transaction backed by Centersquare Issuer LLC and Centersquare Co-Issuer LLC.
How many data centers are involved in this rating?
The rating covers 21 data centers that generate significant revenue and provide critical services.
What is the significance of the revenue figures reported?
The revenue generated indicates the financial stability and growth potential of the data centers involved in the issuance.
What industries are represented among the customers?
The customer base includes a variety of sectors, with significant representation from cloud services, banking, and network service providers.
What does KBRA do?
KBRA is a credit rating agency that evaluates the creditworthiness of different financial instruments, providing transparency and insights into the market.
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