Cologix, a retail colocation provider focused on the enterprise data center segment, which is backed by Stonepeak Infrastructure and Mubadala, is pursuing the issuance of $1.1bn in securitized notes, via a data center securitization. This transaction, known as Cologix 2021-1, will mark the company’s first securitization.

Cologix’s collateral for this securitization includes 17 multi-tenant enterprise data centers in the United States, comprising 36.6 megawatts of critical load power across 299.6k sqft of data center space.

Overall, Cologix is securitizing only part of its total data center portfolio, which currently stands at 37 data centers. For example, the company’s development project in Ashburn, Virginia, and operational capacity in Canada (Montreal, Toronto, and Vancouver) are not part of this securitization.

Cologix’s Securitization Financing – Overview

Cologix’s $1.1bn of securitized notes includes the following three fixed rate term notes (A-2, B, C) and a variable funding note (A-1):

ClassPrincipalInterest RateRepayment*Rating
Class A-1$100mUndrawn3 yearsA-
Class A-2$845m3.30%5 yearsA-
Class B$127m3.79%5 yearsBBB-
Class C$65m5.99%5 yearsBB-
Total$1.14bn3.5%
*Anticipated Repayment Date

Collateral of the Securitized Notes – Cologix Data Centers

Cologix’s $1.1bn asset-backed securitization is collateralized by 17 data centers. Of this total, 6 data centers are owned (53.1% of NOI) and 11 facilities are leased (46.9% of NOI). Below is a breakdown of the portfolio’s data centers:

Data CenterStateBuiltOccupied% Occ.NOI% NOI
Santa Clara – SV1California8.5 MW2.6 MW31%$14.1m16.7%
Columbus – COL3Ohio14.0 MW10.6 MW75%$9.0m10.6%
Parsippany – NNJ3NJ2.4 MW1.5 MW61%$8.2m9.7%
Columbus – COL2Ohio0.8 MW0.8 MW100%$6.1m7.2%
Jacksonville – JAX2Florida2.0 MW0.9 MW47%$5.2m6.1%
Columbus – COL1Ohio0.3 MW0.2 MW74%$2.3m2.7%
Subtotal – Owned28.0 MW16.6 MW59%$44.8m53.1%
Minneapolis – MIN3Minnesota1.5 MW0.7 MW43%$7.6m9.0%
Dallas – DAL1Texas0.5 MW0.3 MW63%$6.7m8.0%
Minneapolis – MIN2Minnesota0.4 MW0.4 MW104%$6.5m7.7%
Minneapolis – MIN1Minnesota0.3 MW0.3 MW95%$4.9m5.8%
Cedar Knolls – NNJ2NJ1.8 MW1.1 MW60%$4.1m4.9%
Jacksonville – JAX1Florida0.5 MW0.1 MW17%$3.3m3.9%
Minneapolis – MIN4Minnesota0.5 MW0.3 MW60%$2.7m3.2%
Parsippany – NNJ1NJ0.4 MW0.3 MW77%$1.8m2.1%
Dallas – DAL2Texas1.0 MW0.7 MW67%$1.3m1.6%
Dallas – DAL3Texas1.7 MW0.1 MW9%$0.7m0.8%
Cedar Knolls – NNJ4NJN/AN/A$0.1m0.1%
Subtotal – Leased8.6 MW4.3 MW50%$39.7m46.9%
Total – All36.6 MW20.9 MW57%$84.5m100%
Note: MW represents megawatts of critical load power.

Geographically, the portfolio’s facilities are located in 7 cities across 6 states.

Key Markets

Cologix’s portfolio’s largest state exposures are Minnesota (25.6% of NOI) and Ohio (20.5% of NOI), with city concentrations in Minneapolis and Columbus. Furthermore, Cologix’s top three data centers, namely Santa Clara – SV1, Columbus – COL3, and Parsippany – NNJ3, together generate 37% of annualized NOI.

Recall that in April 2021, Cologix agreed to acquire vXchnge’s Santa Clara, California data center campus, which is now Cologix’s Santa Clara – SV1 facility. Additionally, Columbus is a market where Cologix is further scaling-up, with its new 40-megawatt hyperscale edge facility called COL4.

Utilization

Cologix’s portfolio is fully-occupied by square footage and 56.9% occupied by critical load power.

Customers

Cologix’s securitization portfolio is currently occupied by 1.06k unique customers, with the portfolio’s largest customer accounting for 11.5% of revenue.

Overall, these data centers have a tenancy base with the top 20 customers comprising ~40% of the portfolio’s aggregate annualized revenue. Of the portfolio’s customer base, only 33% by annualized revenue, are customers with investment-grade credit ratings.

Additionally, the top three industries by annualized revenue include cloud/web services (25.5%), carrier-backbone (8.3%), and financial services – banking/lending (7.4%). Specifically, the company’s top customers are software and cloud service providers, enterprise technology companies, and other internet and corporate enterprises.

Contracts

The weighted average remaining term of the in-place contracts is 1.5 years for the portfolio. While the weighted average remaining contract term including renewal options extends to 2.5 years. Finally, the weighted average original contract term including renewals is 4.0 years.

Notably, the majority of the portfolio’s customer contracts are master service agreements (MSAs), meaning that they are not leases.

Churn

Cologix’s monthly churn rate has averaged ~0.8% since 2018, below the industry average of ~1%.

Financials

Cologix’s portfolio of 17 multi-tenant enterprise data centers generates annualized revenue of $133.8m and NOI of $84.5m (63% margin). Below is a breakdown of Cologix’s different sources of revenue:

  • Colocation: 67% of annualized revenue
  • Interconnection: 20% of annualized revenue
  • Network and Connectivity: 8% of annualized revenue
  • Other Services: 5% of annualized revenue

Valuation

Newmark Knight Frank provided an aggregate as-is appraised value for the data center collateral of $1.3bn. As such, the portfolio was valued at a 6.5% cap rate on its NOI of $84.5m. Additionally, the valuation resulted in a loan-to-value (LTV) of 80%, accounting for the total principal, less the senior note interest and expense reserve.

Transaction Advisors – Cologix Securitization

Cologix’s $1.1bn data center securitization involved the following financial institution:

  • Structuring Advisor, Joint Bookrunner: Deutsche Bank

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