Blackstone-owned data center giant QTS Realty Trust has refinanced four data centers in an $800M deal that is heading to the CMBS market.

The financing was arranged by a consortium of Citigroup and three other banks that are securitizing it as a CMBS offering, CoStar reported. It will refinance $667M of existing debt and provide reserves of around $120M to subsidize build-out costs for new tenants.

The deal is the latest in an unprecedented wave of asset-backed debt offerings tied to data centers.

Of the four properties tied to the $800M loan, a pair of Loudoun County data centers make up the lion's share of the collateral, CoStar reported. Collectively known as the Ashburn-Shellhorn Data Centers, the 618K SF of colocation space at the two facilities is 99.5% occupied by 28 separate tenants.

The other two properties backing QTS’ debt offering are a data center in San Antonio and a mixed-use development near Atlanta.

The refinancing continues a trend that has seen data centers account for a growing — and disproportionate — share of the CMBS market. Since the start of the year, data center lending securitizations have exceeded $3B, according to CoStar, more than double the total from all of 2022.

CyrusOne signed a deal to issue $701M in CMBS in late April, while Stack Infrastructure and Databank utilized asset-backed debt vehicles totaling nearly $1B in separate first-quarter deals. Data centers now account for around 10% of all CMBS lending in 2023, according to CoStar, far exceeding the data center sector’s share of the commercial real estate market.

The increase in asset-backed debt tied to data centers is rooted in the sector’s rapid expansion. Even as issues ranging from supply chain disruptions to power shortages limit development and continue to cause the supply of new data centers to significantly trail demand, the existing pipeline of new data centers still represents a 153% year-over-year increase, CoStar reports, citing data from CBRE.