Key details of the data center, recently sold at 12800 Culver Boulevard in Los Angeles, California, have been revealed through commercial mortgage-backed security (CMBS) filings. The property, which serves as a data center and broadcast facility for DirecTV and boasts 296,000 square feet and 4.8 megawatts of power capacity, was sold by DirecTV to GI Partners’ Essential Tech + Science Fund for $211 million through a 15-year sale-leaseback transaction.
The single-tenant data center at 12800 Culver Boulevard in Los Angeles, California is 100%-leased to DirecTV, which contributes to NOI of $13.4 million. GI Partners’ Essential Tech + Science Fund is securing a $84.8 million CMBS loan against the data center and broadcast facility.
In the following sections, Dgtl Infra delves deeper into key aspects of 12800 Culver Boulevard, including the detailed lease agreement with DirecTV and the specifics of the whole and mortgage loan associated with the property. Additionally, we provide an overview of the Los Angeles data center market, offering a broader context to the strategic importance of DirecTV’s location.
Data Center at 12800 Culver Boulevard, Los Angeles, California
The data center and broadcast facility located at 12800 Culver Boulevard in Los Angeles, California, are held in fee simple interest. The property is situated on a 13.3-acre parcel of land located at the southwest corner of Culver Boulevard and McConnell Avenue in West Los Angeles.
The property at 12800 Culver Boulevard is located approximately 2.7 miles from Venice Beach, 4.3 miles from Los Angeles International Airport, and 15.6 miles west of downtown Los Angeles. Additionally, this property is approximately 5.9 miles from DirecTV’s headquarters in El Segundo, California.
The gross leasable area (GLA) of the property is 296,000 square feet. Out of this, 211,000 square feet is occupied by a building, with approximately half being used as a data center and the other half serving as broadcast/office space dedicated to DirecTV.
The data center building is powered by four, 5,000-ampere mains with 480 volt capacity and 4,800 kilowatts. Additionally, this property includes an 85,000 square foot satellite field that is adjacent to the southwest corner of the data center building.
Constructed in 1968 and renovated in 1998 and 1999, this data center and broadcast facility has underwritten revenues of $13.5 million and underwritten net operating income (NOI) of $13.4 million. The property was recently appraised at $215 million, slightly higher than the $211 million purchase price paid for the facility by GI Partners’ Essential Tech + Science Fund.
In terms of valuation, the data center and broadcast facility are appraised at $726 per square foot and yield a return of 6.2% on the property’s underwritten NOI. The appraisal also determined a land value of $202.2 million, which translates into a valuation of $350 per square foot for the land, based on the property’s 577,843 square foot lot size.
DirecTV – Tenant at 12800 Culver Boulevard, Los Angeles, California
The single-tenant data center at 12800 Culver Boulevard in Los Angeles, California is 100% leased to DirecTV, which occupies the 296,000-square-foot data center and broadcast facility. This property serves as DirecTV’s largest and primary national broadcasting facility.
Lease Agreement and Market Evaluation
DirecTV pays $14.1 million in base rent, with the assumption of no vacancy adjustment, implying a price of $47.52 per square foot. However, according to the appraisal, the market rent for just the 211,000 square feet of building space – excluding the 85,000-square-foot satellite field – is closer to $70 per square foot.
On May 1, 2023, DirecTV entered into a 15-year, triple-net lease with 3.5% annual rent escalations. This lease term is set to expire on March 31, 2038, which means DirecTV has approximately 14.7 years left on its initial lease term.
Additionally, DirecTV has the option to extend the lease for two additional terms, each being 10 years long, and has no termination options. DirecTV also has a right of first offer (ROFO) to purchase the 12800 Culver Boulevard property, but this right cannot be exercised in certain specific circumstances.
Overview of DirecTV’s History, Ownership, and Credit Rating
DirecTV was founded in 1994 and had over 12 million subscribers as of the first quarter of 2023. The company has been at the 12800 Culver Boulevard property since 1998 and its executed lease is guaranteed by DirecTV Entertainment Holdings, LLC, which is rated BB+ by Fitch. Notably, BB+ is considered non-investment grade, also known as a “junk” rating.
DirecTV was originally acquired in 2015 by AT&T (NYSE: T) for $49 billion. However, DirecTV is now 70%-owned by AT&T and 30%-owned by TPG Capital, a private equity firm, as a standalone company with a focus on video and streaming.
Mortgage Loan on 12800 Culver Boulevard, Los Angeles, California
GI Partners’ Essential Tech + Science Fund, operating under the entity GI ETS Culver LLC, is the borrower of a $84.8 million commercial mortgage-backed security (CMBS) whole loan on the 12800 Culver Boulevard property. This CMBS whole loan is comprised of a $75 million mortgage loan and a $9.8 million companion loan.
Considering the data center’s appraised value of $215 million, the $84.8 million whole loan balance represents a 39.4% loan-to-value (LTV) ratio on the property. The loan, which does not include any amortization, is an interest-only loan with an annual interest rate of 6.533%. The loan’s stated maturity date is on July 6, 2028, signifying a 5-year term. Additionally, the loan is backed by sponsor equity of $127.4 million, which was invested by GI Partners to acquire the property.
GI Partners and Essential Tech + Science Fund
The sponsor, GI Partners’ Essential Tech + Science Fund, operates through the entity GI Partners ETS Fund LP. Since launching in 2021, the Essential Tech + Science Fund has acquired 20 properties across key markets in the United States. The fund specializes in investing in data centers, life sciences properties, and “Always On” facilities.
Founded in 2001, GI Partners is a private investment firm with over 140 employees and offices in San Francisco, New York, Dallas, Chicago, Greenwich, Scottsdale, and London. GI Partners had assets under management (AUM) totaling $35 billion as of April 2023.
Los Angeles – Data Center Market Overview
The 12800 Culver Boulevard data center and broadcast facility is located in the Southern California data center market, which serves both Los Angeles and San Diego. Currently, Los Angeles holds a substantial power capacity of 365 megawatts, making it the 7th largest data center market in the United States. Moreover, growth of 50 megawatts of power capacity is forecasted in the Los Angeles market by 2026.
Los Angeles has a dynamic data center market with 100 operational facilities, spanning over 2.7 million square feet of data hall area. Between 2021 and 2026, the market is expected to generate a compound annual growth rate (CAGR) of 2.5%. Despite this expansion, the city maintains a relatively low vacancy rate of 5.7%.
Recently, there has been an increase in new entrants into the Los Angeles data center market. Prominent digital streaming and entertainment production companies, including Amazon Studios, Netflix, Hulu, and Fullscreen, have all established a significant presence in the area.
The Los Angeles market is especially advantageous for data center users looking for both national and international connectivity, thanks to the accessibility of long-haul fiber and subsea cable access points. Diverse long-haul fiber routes connect Los Angeles with key data center markets in Phoenix and Las Vegas and also run along the West Coast from Canada to Mexico. Additionally, Los Angeles is a key subsea cable landing point, reinforcing its position as the United States’ gateway to the Asia-Pacific market and other international hubs.
Dgtl Infra’s Data Center In-Depth Series
Unearth the details behind digital infrastructure by exploring Dgtl Infra’s Data Center In-Depth Series, with cutting-edge insights available at the links below:
- 43915 Devin Shafron Drive in Ashburn, Loudoun County, Virginia
- 7510-7610 Mason King Ct in Manassas, Prince William County, Virginia
- 45360 West Severn Way in Sterling, Loudoun County, Virginia
