With the increasing adoption of cloud-based solutions and artificial intelligence (AI), data centers have emerged as a critical asset class in recent years, requiring massive capital for construction, expansion, and operations (see our October 2024 report for a broader discussion of the data center industry as a whole). As a result, data center owners have been increasingly tapping into structured finance capital markets to fund their portfolios, leveraging asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) structures in both public and unpublished transactions.
Issuers have used ABS structures since 2018—and, beginning in 2021, CMBS single-borrower structures—to finance large data center assets, accounting for $48.69 billion in issuance across 88 transactions in the U.S. ABS structures have accounted for 70.8% of that issuance (75…