Blackstone Real Estate Income Trust (BREIT) today released its annual report, highlighting the company’s operations in nine segments of real estate, with Data Centers representing a small (2%) but growing share of the company’s property portfolio. While BREIT’s most notable data center investment is a 35.7% stake in QTS Realty Trust, collectively, BREIT owns interests in 59 data centers, including via joint ventures with Corporate Office Properties Trust (COPT).
As of December 31, 2021, BREIT’s total data center portfolio comprises 10.2 million sqft and has a gross asset value (GAV) of $2.2bn. Additionally, these 59 facilities have an occupancy rate of 93.5% and generate an average effective annual base rent of $13.57 per leased sqft.
Below is a summary of the three distinct data center investments within the portfolio of Blackstone Real Estate Income Trust (BREIT):
|Investment||# of DCs||Location||sqft||Occupancy|
|QTS Data Centers||48||U.S. & Europe||8.3m||92%|
|D.C. Powered Shells||9||Ashburn & Manassas||1.47m||100%|
|Highpoint Powered Shells||2||Sterling||430k||100%|
Blackstone Real Estate Income Trust (BREIT) – Data Centers
QTS Data Centers
In August 2021, Blackstone Real Estate Income Trust (BREIT), Blackstone Infrastructure Partners (BIP), and other long-term perpetual capital vehicles managed by Blackstone acquired 100% of data center operator QTS Realty Trust (NYSE: QTS) in a $10bn transaction – including net debt, preferred stock, and capital expenditures through closing.
As Jonathan Gray, President & COO of Blackstone points out, QTS was both a real estate and infrastructure investment for the firm: “we privatized a company, QTS, in the digital infrastructure space for $10 billion between real estate and infrastructure”.
Of this total acquisition, BREIT’s share of the purchase price was $3.2bn and the company invested $1.4bn of equity for its 35.7% stake in QTS.
As of December 31, 2021, QTS operates or owns development sites for 48 data centers, which span 8.3 million sqft. Specifically, this portfolio includes 27 data centers in the U.S., two data centers in Europe, and 19 land and development sites in the U.S. Additionally, the company’s operational facilities currently have a 92% occupancy rate.
QTS’ facilities are leased to tenants including cloud service providers, technology, media, and financial services companies. For example, during 2021, QTS had notable leasing wins from tenants in the following metros:
- Hillsboro, Oregon: 35 megawatts with Facebook (Meta)
- Ashburn, Virginia: 5 megawatts with Oracle Cloud
- Chicago, Illinois: 4.5 megawatts with Amazon Web Services (AWS)
D.C. Powered Shell Warehouse Portfolio
In 2019, through multiple transactions, Blackstone Real Estate Income Trust (BREIT) acquired a 90% stake in a joint venture with Corporate Office Properties Trust (COPT) which comprises 9 powered shell data centers in Ashburn and Manassas, Virginia. At the time, the portfolio’s aggregate property value was $345m and BREIT’s 90% interest was purchased for $310.6m.
Overall, this portfolio spans 1.47 million sqft and, per COPT, generates $21.8m of annualized rental revenue (ARR), implying average lease pricing of $14.82 per sqft.
Highpoint Powered Shell Portfolio
In June 2021, Blackstone Real Estate Income Trust (BREIT) acquired 100% of the Highpoint portfolio, which comprises 2 powered shell data centers in Sterling, Virginia. Additionally, BREIT discloses that it purchased these two data center properties for $180m, including acquisition-related costs. Overall, this portfolio spans 430k sqft.