KBRA assigns preliminary ratings to colocation data center ABS backed by 32 facilitie

Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to three classes of notes (Series 2025-3/4 Notes) issued by Centersquare Issuer and Centersquare Co-Issuer as part of a colocation data center asset-backed securities (ABS) transaction. This represents the third ABS issuance for these entities. KBRA reports that its rating analysis includes all prior debt issuances by the Co-Issuers and anticipates affirming the ratings of previous Series 2024-1/2 and Series 2025-1/2 Notes once the Series 2025-3/4 Notes are issued.

The Series 2025-3/4 Notes are secured by a portfolio of 32 data centers that, as of May 31, 2025, were generating approximately $560 million in total annualized monthly recurring revenue (AMRR) and about $300.4 million in annualized adjusted net operating income (AANOI). The collaterals include fee simple interests in 16 multi-customer enterprise data centers covering 63.8 percent of AANOI and leasehold interests in another 16 centers accounting for 36.2 percent of AANOI. The properties span 10 geographic markets and total around 1,494,702 square feet of data center space, with a collective critical load capacity of 228.8 megawatts.

The data centers support colocation customers requiring power, space, and cooling for their IT hardware, along with services for cloud computing, business continuity, and professional operations. KBRA notes that the portfolio serves 1,303 unique customers through separate contracts, with a weighted average remaining contract term of 2.5 years. The largest customer contributes 6.5 percent of AMRR, while the top 20 customers together represent approximately 41.7 percent. Tenants span 15 industries; the three largest segments by AMRR are cloud and IT services (44.5 percent), network service providers (15.1 percent), and banking and securities (12.6 percent).

KBRA references the evaluation based on its structured finance and asset-backed securities methodologies, and incorporates sensitivity analyses and material sources as detailed in its full rating report and disclosures.

Source: Kroll Bond Rating Agency