-

KBRA Releases Research – Data Center Leases: Variations on Established Themes

NEW YORK--(BUSINESS WIRE)--KBRA releases research examining lease structures in the data center industry. This industry continues to expand rapidly amid increasing demand for artificial intelligence (AI) compute capacity, cloud services, and the proliferation of data-intensive technologies. As the need for financing has also risen, data centers have become an increasingly popular asset type in the securitization market. Total new issuance volume in the space reached $27 billion in 2025 and is expected to continue increasing as the next wave of data centers currently under construction is completed and becomes eligible for takeout financing. Importantly, the vast majority of securitized issuance has been backed by wholesale hyperscale assets.

Against this backdrop of accelerating issuance, understanding how hyperscale data center leases are structured—and how they compare with traditional commercial real estate (CRE) leases—is increasingly important. This report examines the key structural features of wholesale hyperscale leases, highlighting similarities, differences, and the provisions that most directly influence cash flow stability and risk allocation. Retail colocation leases are generally excluded except where helpful for contrast.

Key Takeaways

  • Data centers are more capital-intensive and power-dependent than traditional CRE, making expense pass-throughs, capital expenditure allocation, and power-related provisions central to cash flow stability. Power, not space, drives economics.
  • Most hyperscale data center leases are structured as net leases, with variations reflecting differing allocations of operating and capital cost responsibility. The specific allocation of these obligations has direct implications for margin stability and capex exposure.
  • Operational control and life cycle capex are shifting to hyperscale tenants under absolute triple-net structures, supporting near-term cash flow stability but potentially increasing residual value risk.
  • Expanded termination, contraction, and assignment rights can reduce cash flow visibility and alter credit exposure, particularly in concentrated single-tenant assets.

Click here to view the report.

Recent Publications

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1013857

Contacts

Fred Perreten, Managing Director
+1 646-731-2454
fred.perreten@kbra.com

Nitin Bhasin, Senior Managing Director, Global Head of CMBS
+1 646-731-2334
nitin.bhasin@kbra.com

Yee Cent Wong, Senior Managing Director, Lead Analytical Manager, Structured Finance Ratings
+1 646-731-2374
yee.cent.wong@kbra.com

Media Contact

Adam Tempkin, Senior Director of Communications
+1 646-731-1347
adam.tempkin@kbra.com

Business Development Contact

Andrew Foster, Senior Director
+1 646-731-1470
andrew.foster@kbra.com

Kroll Bond Rating Agency, LLC

Details
Headquarters: New York City, New York
CEO: Jim Nadler
Employees: 400+
Organization: PRI

Release Versions

Contacts

Fred Perreten, Managing Director
+1 646-731-2454
fred.perreten@kbra.com

Nitin Bhasin, Senior Managing Director, Global Head of CMBS
+1 646-731-2334
nitin.bhasin@kbra.com

Yee Cent Wong, Senior Managing Director, Lead Analytical Manager, Structured Finance Ratings
+1 646-731-2374
yee.cent.wong@kbra.com

Media Contact

Adam Tempkin, Senior Director of Communications
+1 646-731-1347
adam.tempkin@kbra.com

Business Development Contact

Andrew Foster, Senior Director
+1 646-731-1470
andrew.foster@kbra.com

Social Media Profiles
More News From Kroll Bond Rating Agency, LLC

KBRA Assigns Preliminary Ratings to IGS Solar Shamrock Issuer 2026-1, LLC

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to two classes of notes issued by IGS Solar Shamrock Issuer 2026-1, LLC. The transaction is collateralized by a diversified pool of 18,488 leases and power purchase agreements (PPAs) associated with residential solar photovoltaic installations (PV Systems). The total Aggregate Discounted Solar Asset Balance (ADSAB) based on a discount rate of 7.25%, consisting of the discounted payments of the leases and PPAs, is approximately $374.7 m...

KBRA Assigns Preliminary Ratings to Hildene 2026-NQM1 Mortgage Trust (HILD 2026-NQM1)

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to ten classes of mortgage pass-through certificates from Hildene 2026-NQM1 Mortgage Trust (HILD 2026-NQM1), an RMBS transaction sponsored by Hildene-CCC Loan Acquisition II, LLC (“Hildene”), with mortgage loans acquired from Button Finance, Inc., acting as the aggregator. The $292.5 million transaction is collateralized by a pool of 381 residential mortgages, including a meaningful concentration of collateral that KBRA considers to be...

KBRA Assigns Preliminary Ratings to PMT Loan Trust 2026-INV10 (PMTLT 2026-INV10)

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to 99 classes of mortgage-backed notes from PMT Loan Trust 2026-INV10 (PMTLT 2026-INV10), a prime RMBS transaction sponsored by PennyMac Corp. (PennyMac), an indirect, wholly-owned subsidiary of PennyMac Mortgage Investment Trust (PMT). PMTLT 2026-INV10 comprises 1,081 fixed-rate mortgages (FRMs) with an aggregate principal balance of $409.1 million as of the November 1, 2026 cut-off date. The underlying pool consists of agency-eligibl...
Back to Newsroom