Morningstar DBRS Finalizes Provisional Credit Ratings on Compass Datacenters Issuer II, LLC, Series 2024-2 (Compass 2024-2) and Confirms Credit Ratings on Compass Datacenters Issuer II, LLC, Series 2024-1 (Compass 2024-1)

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings on the following classes of Term Notes, Series 2024-2 issued by Compass Datacenters Issuer II, LLC (the Master Trust):

--Class A-1 at AAA (sf)
--Class B-1 at A (sf)
--Class B-2 at A (low) (sf)

Additionally, DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on the following classes of Term Notes, Series 2024-1 issued by Compass Datacenters Issuer II, LLC (the Master Trust):

-- Class A-1 at AAA (sf)
-- Class A-2 at AA (sf)
-- Class B at A (sf)

All trends are Stable.

Compass 2024-2 is collateralized by the borrower's fee-simple interest in three hyperscale data center properties in Red Oak, Texas, in the Dallas metro. The subject data centers are owned and operated by Compass Datacenters, LLC (Compass) and represent the first three data centers of a larger 10-building master-planned campus. The subject data centers were completed between 2023 and 2024 and are 100% occupied by a tenant rated AAA, which has fully leased the entire campus. DBRS, Inc. (Morningstar DBRS) generally takes a positive view on the credit profile of the overall transaction based on its strong credit tenancy profile, strong data center operator, favorable market composition, affordable power rates, and desirable efficiency metrics. The transaction is structured as a master trust with the subject series 2024-2 notes being the second issuance of notes from the master trust. The inaugural Series 2024-1 notes were securitized by the first two data centers in the Red Oak campus: DFW-III-A and DFW-III-B. As part of the subject issuance, the third data center in the campus, DFW-III-C, will be contributed to the master trust. The debt and collateral associated with the first issuance from the master trust were considered during the analysis of the subject issuance.

Data centers, while having existed in one form or another for many years, have become a key component in the modern global technology industry. The advent of cloud computing, streaming media, file storage, and artificial intelligence applications has increased the need for these facilities over the last 10 years in order to manage, store, and transmit data globally. While previous incarnations of data centers were often constructed in existing buildings and converted, the needs of the market have begun to require purpose-built facilities that are engineered for this single use.

Morningstar DBRS' credit ratings on Compass 2024-2 address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Amounts and Interest Distribution Amounts for the rated Notes.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, Spread Maintenance Premiums.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS  

There were no Environmental, Social, or Governance factors that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating and Monitoring Data Center Transactions (January 23, 2024),
https://dbrs.morningstar.com/research/427033.

Other methodologies referenced in this transaction are listed at the end of this press release.

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of final credit ratings on the above-mentioned securities is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (June 28, 2024), https://dbrs.morningstar.com/research/435293
-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.