CyrusOne: CyrusOne Data Centers is Getting Ready to Issue CMBS Worth $701 million

Apr 20, 2023 | Posted by Abdul-Rahman Oladimeji

Asset-backed securities totaling $701 million will be backed by real estate and tenant contracts for space and electrical capacity in five finished and operational data centers in Texas and Virginia. According to a pre-sale assessment from S&P Global Ratings, the CyrusOne Data Centers, 2023-1 deal constitutes the first issuance for the master trust because the sponsor will split the collateral between series 2023-1 and any subsequent series from the master trust. Barclays Capital, Citigroup Global Markets, KKR Capital Markets, Goldman Sachs & Co., as well as Wells Fargo Securities are among the banks working together as arrangers. According to S&P, the assets' combined critical load power between Sterling, Virginia, and San Antonio, Texas, is 65.25 megawatts.

The turnkey nature of every data center in the portfolio is seen favorably by the rating agency. According to S&P, in turnkey scenarios, the issuer offers space, physical security, electricity, cooling, and continuing power and cooling systems maintenance. The issuer also controls the essential mechanical and electrical infrastructure. Modified gross leases are also anticipated to yield nearly 100% of the portfolio's annualized adjusted base rent (AABR) as of the transaction's closing date, according to S&P, even if the percentage may alter as space is made available to new tenants over time. The portfolio is more highly weighted toward multi-tenant buildings than single-tenant properties in terms of other portfolio characteristics. Two data centers in Sterling, Virginia, and one data center property in San Antonio, Texas, are currently multi-t. At the same time,acilities. At the same time, two additional buildings—one in Sterling, Virginia, and the other in San Antonio, Texas—are single-tenant.

A strong management team is one of the deal's more advantageous credit features. According to S&P, the management team at CyrusOne comprises people with considerable expertise in the real estate, REIT, telecommunications, technology, and mission-critical infrastructure industries. CyrusOne itself has more than 20 years of operational history.