Fitch Assigns RD Michigan Property Owner I LLC Final 'BBB' Rating

Published: 2026-05-04 07:35:20 ET ORCL

Published on 05/04/2026 at 07:35 am EDT

Fitch Ratings has assigned RD Michigan Property Owner I LLC's senior secured notes a final rating of 'BBB'.

The notes total $14 billion. The Rating Outlook is Stable.

The 'BBB' rating reflects the construction phase of a large data center campus in Saline Township, Michigan. The lease's date certain rent commencement provides downside protection for construction delays. Once operational, it should present a stable profile under a triple net (NNN) data center lease, guaranteed by Oracle Corporation (BBB/Stable), secured for an initial term of about 17.5 years. The notes are fully amortizing and mature in 2045, which is coterminous with the initial lease term. This insulates the project from refinancing risk. The debt amortizes during the initial lease term, so the project does not rely on lease renewal.

Fitch assesses dependence on the tenant as high with the Oracle Corporation guarantee acting as a cap to the project rating.

KEY RATING DRIVERS

Large-Scale Construction Offset by Robust Lease Protections (Completion Risk: Midrange): Despite the project's large scale, construction risk is mitigated by adequate contingencies, strong lease provisions that provide for rent commencement on a date certain, no lease termination rights in the event of delay, a rent structure that allows for cost pass-throughs, and the use of modular and proven construction approaches. The contractor, Walbridge, has a track record of delivering data centers on schedule and within budget, albeit at a much smaller scale than the project. Cost overrun risk for the project is also low due to several mitigants.

Though not locked in at financial close, the guaranteed maximum price (GMP) contract should be signed by mid-2026, limiting pricing uncertainty. The lender's technical advisor (LTA) views the 4% developer contingency and buffer to budget line items as above benchmark ranges. The lease also largely allows for construction cost pass-throughs to the tenant through rent. The LTA views the construction schedule as ambitious, but delay risk is mitigated by the absence of tenant termination rights and by rent that starts on a date certain. Contingencies are sufficient to cover carry costs until rent commencement.

Limited Power Delivery Risk (Supply Risk: Stronger): The power responsibilities of the landlord are relatively straightforward and primarily include installation and connection of required electrical infrastructure to ensure each building can receive permanent electrical power. The local utility will provide electric service and certain power infrastructure construction, further reducing the project's power risk exposure. If a power-related delay is not caused by the landlord, the tenant must pay carry costs after 60 days if the landlord elects, and rent starts on a date certain. There are no lease termination rights related to power.

The Michigan Public Service Commission (MPSC) has approved the primary supply agreement (PSA) and energy storage agreement (ESA). However, petitions and motions have been filed seeking rehearing, clarification, and potentially the conversion of the approval into a contested case. This could delay power delivery or lead to the modification or termination of the PSA/ESA. Fitch believes these delays will likely be treated as power delays under the lease, which, along with rent commencing on a date certain, provides protections to the landlord. In addition, there is no termination for power delay. Fitch therefore considers this risk mitigated.

No Lease Renewal Risk; Strong Counterparty (Revenue Risk: Stronger): A wholly owned subsidiary of Oracle Corporation has committed to a lease of about 17.5 years, backed by an Oracle guarantee. The debt fully amortizes concurrently with the initial term of the lease, eliminating any reliance on lease renewal. This leads to a 'Stronger' assessment despite the project's location in Saline Township, Michigan, a relatively remote data center location that is well-suited for artificial intelligence (AI) training and less optimal for low-latency applications such as cloud.

Largely Recoverable Costs, Limited Landlord Operating Scope (Operation Risk: Stronger): The lease is structured as an NNN lease with operating costs, including power and utilities, reimbursed by the tenant. Operating responsibilities, including repair and maintenance, are also primarily the tenant's responsibility. The landlord's responsibilities are generally limited to the common areas, unless turned over to the tenant with financial obligations limited to certain unamortized capital costs. Importantly, there are no termination rights in the lease as it relates to the operations of the facility or landlord performance requirements such as uptime, temperature, or humidity levels.

Infrastructure Development and Obsolescence Risk: Neutral: Although the project is in an emerging data center market and specifically designed for AI training, which could elevate long-term obsolescence risk, these factors are offset by the fully amortizing debt structure within the initial lease term. As the data center will be newly constructed, the landlord's capital obligations are expected to be minimal and limited to certain unamortized capital costs. Fitch anticipates these costs will be funded with excess cash flow, further supporting a neutral assessment of risk.

Debt Structure: Midrange: The debt is a fully amortizing, fixed-rate senior secured note and not exposed to refinancing or interest rate risk. The structural features of the debt are midrange overall, with the debt service reserve account sized to cover only three months of debt service, which is notably weaker than in other project finance transactions. Allowances under the debt documents, including for asset sales and release of collateral, are subject to a pro forma debt service coverage ratio (DSCR) of 1.05x, which Fitch considers in its rating case.

Upon project completion, a one-time excess-proceeds distribution and other restricted payments are tied to a DSCR at or above 1.05x, which Fitch considers reasonable. In addition, the debt is cross-defaulted with that of the pledgor; however, this risk is mitigated as the pledgor is a bankruptcy-remote entity with no ability to borrow.

The debt has an outside date of Dec. 31, 2030. If final completion, excluding any power-related delay, has not occurred by this date, unutilized note proceeds must be used to repay the notes unless certain conditions are met. However, the risk of breaching the outside date is mitigated. Except in event-risk cases, such as non-appealable judgments or changes in law that prohibit the landlord's work, repayment is not required if the issuer and completion guarantor are diligently pursuing completion in good faith and no event of default has occurred. In addition, the outside date is nearly three years from the latest target completion date, providing sufficient headroom.

Peer Analysis

RD Michigan's closest peers are Cipher Compute LLC (BB-/Stable) and WULF Compute LLC (BB/Stable), both of which are constrained by elevated completion risk. In comparison to these peers, RD Michigan has lower completion risk because the lease has no termination rights and rent begins on a fixed date, despite its much larger scale. RD Michigan's higher rating is primarily driven by lower completion risk along with the NNN nature of the lease with Oracle, and a fully amortizing debt structure, despite its lower coverage ratios.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of Oracle Corporation's rating could lead to a similar rating action for RD Michigan;

Delays or cost overruns during construction that increase financing costs not covered by project contingencies;

A reduction in average DSCR or a minimum DSCR sustained below 1.05x. This is lower than the 1.05x DSCR in Fitch's rating case, which reflects certain allowances tied to that level.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Successful completion of the project, together with an upgrade to Oracle Corporation's rating.

Financial Profile

In Fitch's rating and base cases, the total project budget and operating assumptions are in line with the sponsor case, with post-completion cash flows only extending through to the initial lease term of about 17.5 years. Under these assumptions, the Fitch rating case model results in a sustained low average DSCR of 1.09x during the amortization period (2033-2045). Fitch, however, rates to a DSCR of 1.05x because of allowances under the debt documentation, such as asset sales tied to this level. The rating is also constrained by construction risk and Oracle's credit profile.

TRANSACTION SUMMARY

RD Michigan Property Owner I LLC is using a $14 billion senior secured note to finance construction of building 1, a 14 MW network core building, and buildings 2-4, each a 320 MW hyperscale data center, located in Saline Township, Washtenaw County, Michigan. Fitch expects total project costs to be $15.5 billion with $1.5 billion in equity contributions prior to debt draws. The notes fully amortize through 2045, concurrent with the initial lease maturity. The structural features in the debt documentation are tied to a DSCR of 1.05x, and implied maximum 90% LTC.

SECURITY

The notes will be secured by perfected first-priority liens on substantially all of the assets of the issuer and subsidiary guarantor, which include the project account, real property, mortgages, rights under project documents, including leases and rents. The collateral package will also include pledges of all equity interest in the issuer and subsidiary guarantors.

Date of Relevant Committee

22-Apr-2026

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

RD Michigan Property Owner I LLC's bond ratings are linked to Oracle Corporation's Issuer Default Rating.

Climate Vulnerability Signals

The results of our Climate.VS screener did not indicate an elevated risk for RD Michigan Property Owner I LLC.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

RATING ACTIONS

Entity / Debt

Rating

Prior

RD Michigan Property Owner I LLC

RD Michigan Property Owner I LLC/Senior Secured Debt/1 LT

USD 14 bln 7.5% bond/note 30-Mar-2045 74941YAA0

BBB

New Rating

BBB(EXP)

Page

of 1

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The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.

APPLICABLE CRITERIA

Completion Risk Rating Criteria (pub. 10 Jul 2025)

Project Finance Digital Infrastructure Rating Criteria (pub. 08 Aug 2025) (including rating assumption sensitivity)

Infrastructure & Project Finance Rating Criteria (pub. 15 Nov 2025) (including rating assumption sensitivity)

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

Third-party Model (1)

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