North American data center firm US Signal is preparing to raise debt across three asset-backed securities (ABS).

The company is looking to raise up to $525 million, with credit rating agency KBRA assigning a preliminary rating of A- to the notes.

ABS is a type of financial investment that is collateralized by an underlying pool of assets – in this case, data centers.

US Signal plans to secure the debt against ten of its existing owned data centers, which together span 427,990 square feet (39,760 sqm) of data center space and support around 22.5MW of critical load.

The colocation data centers are generating approximately $111.8 million of annualized recurring revenue (ARR) and $63.8m of annualized adjusted net operating income (AANOI). The facilities are home to 839 unique customers, with a weighted average remaining contract term of 2.1 years (without renewals).

The largest customer accounts for 9.7 percent of ARR while the top 20 customers account for approximately 40.8 percent of ARR.

KBRA noted that the "portfolio consists of older assets in secondary and tertiary data center markets, which generally exhibit smaller tenant bases, potentially more limited re-leasing opportunities, and reduced asset liquidity relative to primary markets."

Three properties, representing 13.6 percent of the pool’s appraised value, are in Texas. Two properties (6.9 percent) are located in the Chicago market, and one property (2.5 percent) is in the New York market.

The agency added: "To account for these characteristics, KBRA applied a stressed terminal capitalization rate of 12.0 percent, compared to a range of 10.5 percent to 11.5 percent for other KBRA-rated colocation ABS transactions."

Of the $525m, $75m will be Variable Funding Notes with an anticipated repayment date of November 2031 and a final maturity of November 2056. $250m will be based on the same timeline, but with a TBD fixed rate. The final $200m anticipated repayment date will start on November 2033, end on November 2056, and again have a TBD fixed rate.