COPT, a data center REIT, has signed eight wholesale data centers, totaling 1.3 million sq ft, over to Blackstone Real Estate, for $293 million.
The data centers, partially or wholly owned by COPT (Corporate Office Properties Trust), will be sold to joint ventures with Blackstone, in a deal that follows a similar $265 million investment in June 2019. The eight data centers are all leased to single tenants and, according to Bloomberg, all eight are in Northern Virginia. The two companies haven't given details of their share in the joint venture, but it can be assumed that effectively Blackstone will own nearly 90 percent of the facilities.
Voracious demand
Demand for data center space in Northern Virginia continues to top a sector that is growing fast everywhere. In 2019, with the Commonwealth already dominating the US market, 60 percent of the space under construction was in Northern Virginia, according to a report by CBRE. Much of this space is in the form of "shells", powered buildings built for a single tenant, and this is the market which COPT serves.
In a recently closed transaction, COPT transferred two data centers it owns outright to a joint venture with Blackstone. The data centers are valued at $90 million and the Blackstone joint venture will own 90 percent of those properties. A similar deal with take six more data centers partially owned by COPT, and transfer those to 90 percent ownership by a COPT-Blackstone joint venture. that deal is expected to close in the next two months, before the end of 2020.
June 2019 was very similar, taking seven data centers, with a total of 1.2 million sq ft, and transferring them to co-ownership by Blackstone for $265 million.
The deal gives COPT money to invest in further projects, and capitalizes on the continued growth of data centers in the pandemic, as businesses switch to digital working.
“We are very pleased to expand our relationship with Blackstone. These transactions further confirm the value of our portfolio of strategically located data center shell properties and the value our development platform adds for shareholders,” stated Stephen E. Budorick, COPT’s president and CEO.
Tyler Henritze, head of acquisitions Americas for Blackstone Real Estate, said, “We believe data centers will continue to benefit from strong secular tailwinds, including immense demand growth as Internet traffic and the use of cloud services continue to rise. These transactions are attractive opportunities to invest in high-quality powered shell warehouses in the premier market globally."
