KBRA Highlights ABS vs. CMBS for Data Center Financing
New research from KBRA explores the distinctions between asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) in data center financings, offering insight into how these structural differences can shape issuer strategies and investor preferences.
Amid surging demand driven by cloud computing and artificial intelligence (AI), data center operators are increasingly turning to structured finance markets—employing both ABS and CMBS formats to raise capital. Since 2018, U.S. data center financings have totaled $48.69 billion across 88 transactions, with ABS accounting for 70.8% of issuance and CMBS making up the remaining 29.2%. ABS deals have averaged $459.7 million, while CMBS single-borrower deals, introduced in 2021, have averaged $1.09 billion.
Year-to-date figures through May 2025 show an even split between the two structures. The trend is also expanding internationally, with two recent European data center securitizations—one backed by UK assets in 2024 and another by German assets in 2025—both issued as ABS.
Most transactions in both structures have been secured by stabilized, cash-flowing assets with minimal construction or lease-up risk. However, some sponsors are now pursuing project finance vehicles to support development-stage assets.
KBRA notes that the decision to use ABS or CMBS depends on various factors, including operational flexibility, pricing, capital availability, and the specifics of ownership structures—making deal structuring a critical consideration for both sponsors and investors in this evolving sector.
