NEW YORK–(BUSINESS WIRE)–#creditratingagency–KBRA assigns preliminary ratings to three classes of notes from Flexential Issuer, LLC and Flexential Co-Issuer, LLC (together, the Co-Issuers), Series 2025-1 and Series 2025-2 (Series 2025-1/2).
The Notes are secured by 26 data centers generating approximately $583.3 million of Annualized Revenue and $292.4 million of Annualized Adjusted Net Operating Income (AANOI) as of May 31, 2025 (the Statistical Disclosure Date). Site level revenue includes incremental revenues in excess of the annualized rental revenue from tenant contracts. All customer contracts that relate to the data centers generated approximately $565.9 million of Annualized Revenue and $292.4 million of AANOI as of the Statistical Disclosure Date. Annualized Revenue means the total revenue expected from a customer contract over a 12-month period as of the determination date. For active contracts, it includes current Annualized Monthly Recurring Revenue (AMRR) plus additional revenue earned over the past year. For forward starting contracts, it includes projected recurring and additional revenue for the next year, and any related amounts held in the Forward Starting Contract Reserve Sub-Account; however, if the contract’s fee commencement date is more than three months away and the required reserve has not been funded, its Annualized Revenue is assumed zero.
The five series of notes are secured by 26 data centers including revenues from customer contracts associated with the data centers. The real property collateral includes leasehold interests in 18 multi-customer enterprise data centers and fee simple ownership interests in eight multi-customer enterprise data centers. One of the leasehold interests is for 99 years and given the duration of the leasehold interest, KBRA will give residual value credit for this asset and for the remainder of this report will be included in the statistics for the owned assets. The data centers are comprised of approximately 1.6 million square feet (sf) of data center space and can provide approximately 158 megawatts (MW) of critical load power to customers. The portfolio is currently occupied by 2,183 unique customers.
The data center colocation customers typically use the data centers for power, space, and cooling of their data center equipment for web hosting, web servers, and web routers. In addition, some customers also add data protection, cloud and managed services products. As of the Statistical Disclosure Date, the top 20 customers comprise approximately 28.9% of Annualized Revenue and the top three industries include software (14.5% Annualized Revenue); business services (12.4%); and computer equipment & peripherals (6.9%).
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Methodologies
- ABS: General Global Rating Methodology for Asset Backed Securities
- CMBS: North American CMBS Property Evaluation Methodology
- CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
- Structured Finance: Global Structured Finance Counterparty Methodology
- ESG Global Rating Methodology
Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
Doc ID: 1012025
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