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Is COPT Planning Multiple Data Centers Development for AWS?

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Corporate Office Properties Trust’s (OFC - Free Report) affiliate is likely to acquire part of Waterside in Sterling and come up with multiple data centers for Amazon Web Services — a subsidiary of (AMZN - Free Report) — per The Business Journals report.   

Particularly, the unit — Waterside I LLC — is in a deal to buy 78 acres of Waterside, and Corporate Office Properties Trust, popularly known as “COPT”, has plans to develop multiple data centers for Amazon, as well as a shopping center having frontage on Route 606, according to the report citing multiple sources.

Notably, COPT mainly focuses on the ownership, management, leasing, acquisition and development of office and data-center properties in select locations in the United States. On Jun 30, 2018, the company’s core portfolio included 157 office and data-center shell properties, spanning 17.5 million square feet of areas and 93.4% leased. Further, the company enjoys ownership of wholesale data center with a critical load of 19.25 megawatts.

For Amazon Web Services, usage of a third party for land purchase and data-center development is a common practice and COPT is well leveraging on such potentials. In fact, with growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, demand for data centers are increasing significantly.

Also, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five-eight years. These factors, along with an improved outlook for economic growth, are anticipated to substantially drive growth of this real estate category in the upcoming years.

In addition, Waterside is a mixed-use development project that marks the replacement of the 235-acre Loudoun Quarries south of Route 606. With an additional 100 acres north of that, the total site spans 335 acres and owned by Chantilly Crushed Stone, which is a unit of the Gudelsky Group.

This development is slated to include 2,200 multifamily units and 395 age-restricted units. Also, it would encompass 1.9 million square feet of office, 645,000 square feet of flex/office, 350,000 square feet of hotel, 782,000 square feet of retail and 272,000 square feet of civic space, and have a 54-acre lake.

Admittedly, mixed-use developments have gained immense popularity in recent years. Such developments lower the distance between housing, workplaces, retail businesses, and other amenities and destinations. Hence, such developments enable companies to grab the attention of people who prefer to live, work and play in the same area — a trend that drove development in several other cities in the United States. As such, occupancies of such developments are expected to remain high.

COPT currently carries a Zacks Rank #3 (Hold). The company’s shares have gained 16.6% in the past six months and outperformed the industry’s rally of 7%.


Stocks to Consider

Better-ranked stocks in the REIT space include Condor Hospitality Trust, Inc. (CDOR - Free Report) and Park Hotels and Resorts, Inc. (PK - Free Report) . Both stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Condor Hospitality Trust’s Zacks Consensus Estimate for 2018 FFO per share has been revised 0.9% upward over the past 60 days.  

Park Hotels and Resorts’ FFO per share estimates for 2018 moved up 2.1% in 60 days’ time.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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