Corporate Office Properties Trust (COPT) today announced its Q4 and full-year 2021 financial results alongside updated disclosures on its data center joint ventures in Northern Virginia with Blackstone Real Estate Income Trust (BREIT) and Blackstone Real Estate, as well as details on its largest data center tenant, Amazon Web Services (AWS).
COPT Joint Ventures with Blackstone – Q4 2021
As of Q4 2021, COPT owns 19 data center shells in Northern Virginia, which are 100%-occupied, through three joint ventures with Blackstone. In each of these joint ventures, Blackstone owns a 90% equity interest, while COPT retains the remaining 10% ownership. Geographically, these facilities are located throughout the Northern Virginia data center sub-markets of Ashburn, Manassas, and Sterling, Virginia.
As shown below, COPT’s joint ventures with both Blackstone Real Estate Income Trust (BREIT) and Blackstone Real Estate comprise 3.2 million sqft:
|Blackstone JVs||Formed||# of DCs||Rent*||sqft||per sqft|
|BRE-COPT 2||October 2020||8||$17.5m||1.28m||$13.68|
|BRE-COPT 3||June 2021||2||$6.3m||0.43m||$14.61|
Overall, COPT’s three joint ventures with Blackstone generate $45.6m of annualized rental revenue (ARR) and, for full-year 2021, produced $36.3m of cash net operating income (NOI). Therefore, based on the joint venture’s $744m of total assets, these Northern Virginia data center shells have a 4.9% in-place cash NOI yield.
In Q4 2021, COPT disclosed its strategy for value creation through “low-risk development of mission critical facilities”. Through the development of data center shells for cloud computing customers, such as Amazon Web Services (see below), COPT targets the following metrics:
- Initial Cash Yield on Cost: ~6.5%
- Expected Cap Rate if Sold: less than or equal to 4%
- Value Created: 50%+
COPT Data Center Portfolio – Q4 2021
Beyond COPT’s joint ventures with Blackstone, the company fully owns another 7 data center shells, comprising 1.6 million sqft. Therefore, in aggregate, COPT has stakes in 26 single-tenant data center shell properties, comprising 4.7 million sqft, either directly or through joint ventures.
Additionally, in January 2022, COPT sold its only wholesale data center, with a critical load of 19.25 megawatts, to CloudHQ for $222.5m.
Amazon Web Services (AWS) – Q4 2021
COPT’s largest data center tenant is Amazon Web Services (AWS), which as of Q4 2021 comprised 9.2% of the company’s total rental revenue (i.e., including office tenants). AWS pays COPT $54.5m of rental revenue annually and has an 8.6-year weighted average remaining lease term. In aggregate, AWS leases 5.0 million sqft of data center shell space from COPT, implying average lease pricing of $10.94 per sqft.