Dentons – Financing data centres: SASB securitisation structure in focus
- Single Asset Single Borrower (SASB) securitisation is a well-established U.S. structure for financing income-generating commercial real properties, including data centres.
- The structure is gaining interest in Australia as sponsors seek capital-efficient alternatives to traditional debt.
- Adapting SASB to the Australian legal and regulatory environment will require careful structuring, but the structure should be commercially viable in the context of the Australian data centre market.
Background
Australia is now one of the world’s leading data centre markets, driven by demand for cloud computing, AI, and digital services. As the sector matures, sponsors are increasingly looking to capital markets for refinancing options. Securitisation, particularly the SASB structure, offers a compelling alternative to traditional bank debt for stabilised assets.
What is SASB?
A SASB is a securitisation structure typically used to finance one or more large income-generating commercial property assets (such as data centres). The structure involves issuing securities backed by a single mortgage loan secured over the assets. Payments on the mortgage loan are made from the cashflows generated by the underlying assets, which are then passed through to the investors.
Why it matters
SASB structures offer:
- Long-term, stable funding aligned with the asset’s income profile.
- Investor appeal, particularly for institutional investors seeking highly rated infrastructure exposure.• Structural simplicity, making it suitable for bespoke, asset-specific transactions.
- Structural simplicity, making it suitable for bespoke, asset-specific transactions.
Stakeholder considerations in SASB structures
For sponsors
The lenders who originated the mortgage loan secured by the data centre assets, play a central role in initiating SASB transactions in the U.S., and in this context typically have a sponsor role, as summarised below:
- Loan origination & structuring: The sponsors originate the mortgage loan backed by the data centre asset and structure the SASB transaction to securitise the loan and may retain a portion of the credit risk.
- Collateral management: The sponsors ensure the mortgage loan is secured by high-quality collateral, such as long-term leases with hyperscale or colocation tenants.
- Capital markets execution: Acting as both lenders, sponsors and in many cases underwriters, coordinate with legal counsel and rating agencies to bring the transaction to market.
This approach allows sponsors to recycle capital, manage balance sheet exposure and tap into institutional investor demand.
Their key considerations include:
- Asset readiness: SASB structures are best suited for stabilised assets with predictable income streams. Sponsors must ensure that data centres are fully operational, tenanted and generating consistent lease revenue.
- Structuring and guarantees: Sponsors will require the parent of the Special Purpose Vehicle (SPV) Borrower to provide limited guarantees (e.g., “bad-act” guarantees) to enhance investor confidence.
- Retention requirements: Sponsors may be required to retain a portion of the issued securities to comply with risk retention rules. This aligns their interests with investors but may impact capital efficiency.
- Legal and tax structuring: Sponsors must work with advisors to establish bankruptcy-remote SPVs and ensure compliance with local tax and regulatory frameworks, particularly when adapting U.S. structures to Australian law.
For investors
Institutional investors are the primary purchasers of securities issued under SASB structures. Their key considerations include:
- Asset quality and tenant profile: Investors will assess the creditworthiness of tenants and the quality of the underlying data centre assets. Long-term leases with investment-grade tenants are preferred.
- Security and cashflow rights: Investors rely on the security package and cashflow waterfall to protect their interests. Clear documentation and robust enforcement mechanisms are essential.
- Regulatory compliance: Investors subject to EU or UK regulations may require enhanced disclosure and reporting. Issuers should be prepared to provide asset-level data and transaction documentation.
- Tranching and risk appetite: Investors must evaluate the structure of the securities, including highly rated senior and subordinated tranches, and determine their risk tolerance. SASB deals often feature bespoke tranching tailored to investor needs.
Conclusion
Sponsors with stabilised data centre assets should consider whether SASB securitisation aligns with their funding strategy. Investors and arrangers should prepare for increased activity in this space as the market evolves.
In our next article, we will explore the Secured Data Centre Revenue Master Trust (DCMT) structure, which is a more scalable alternative for platform-style strategies.
Looking for deeper insights into the data centre space?
This article is part of our ongoing thought leadership series exploring key legal developments and strategic considerations on the data centre sector in Australia. If you found this insightful, explore our previous articles to deepen your understanding and stay ahead of legal trends:
- “Powering tomorrow: key considerations in data centre financing,” July 23, 2025
- “Data centre series: Implications of data security and sovereignty trends for the Australian data centre market,” July 15, 2025
- “Powering Australia’s data centre boom: Navigating compliance and opportunity,” July 3, 2025
- “A planning pathway for data centre development – Summary and key issues,” June 27, 2025
- “Powering tomorrow: A snapshot of a data centre,” June 12, 2025
- “In demand: A snapshot of the rise of data centres,” June 4, 2025
Dentons is a trusted advisor to technology leaders, developers, and investors on data centre projects across Australia and around the world. With a globally integrated team of sector-leading legal professionals, we bring unmatched insight and experience to every stage of the project lifecycle.
READ the latest news shaping the data centre market at Data Centre Central
Dentons – Financing data centres: SASB securitisation structure in focus, source
