Welcome to our third year tracking the largest property investors in the federal space. For those of you who have reviewed the 2013 and 2014 editions of our Top 10 list, you know that we limited those lists to owners of GSA-leased properties. While GSA is the primary lessee of space on behalf of federal tenants, there are any number of agencies that use delegated or statutory authority to execute leases directly.
This year, we are expanding our top owners tally to include those properties, too; we exclude only United States Postal Service leases. This modest methodology tweak has reshuffled our list slightly from previous years. Otherwise, as in years past:
- We have ranked owners by square footage and not by rent or any other measure because square footage is the most unimpeachable metric available to us.
- We only tallied leases that have commenced. If a lease has been awarded but not yet commenced (as in a lease-construct project, for example), we haven’t counted that in this list.
- Determining “ownership” is tricky business. We have typically defined the owners as those operating partners who are the face of these properties — the people who ultimately manage the assets. However, we recognize that for some properties there may be behind-the-scenes equity partners whose ownership stake is substantial. We have not attempted to identify these equity partners in this list.
- If you think we’ve miscounted your portfolio, email me or leave a comment below.
Here is this year’s ranking:
1. Government Properties Income Trust
Government Properties Income Trust (NYSE: GOV) remains at the top of the list. The REIT owns 71 properties totaling 10.7 MSF, though 6.9 MSF are leased to federal tenants and the remainder to State agencies, the United Nations and a smattering of private-sector tenants. The firm remains an active buyer of government properties, though it has not purchased any new federally-leased buildings since we published this list last year.
2. The JBG Companies
The JBG Companies is a Washington, D.C.,-focused developer and investor, but its experience building GSA-leased properties is second to none. JBG has completed four GSA-leased buildings totaling more than 2.5 MSF of GSA-leased space since the beginning of 2013. Among the largest properties owned by JBG are the 1.35 MSF U.S. Department of Transportation headquarters; the renovated Parklawn Building, which houses 935,000 SF of U.S. Health and Human Services tenants; a 575,000 SF facility housing NIH’s National Cancer Institute and a recently constructed 538,000 SF Social Security Administration building in Baltimore.
3. Corporate Office Properties Trust (COPT)
Corporate Office Properties Trust (NYSE: OFC) is a $2.2 billion REIT with a property portfolio totaling 18 MSF. About 3.8 MSF of this space is leased to federal tenants. What makes the COPT portfolio unique on this list is that GSA leases comprise less than 2 percent of COPT’s federal tenancy. Most federal leases are with other U.S. Government entities, primarily the U.S. Army Corps of Engineers, which sources space for military and intelligence users.
4. Vornado Realty Trust
In last year’s ranking I remarked that Vornado (NYSE: VNO) may deserve an award for resilience, having managed to maintain substantial government occupancy despite the fact that BRAC caused more than 2 MSF of Department of Defense tenants to vacate its Northern Virginia portfolio. Much of this space has been backfilled, and VNO has been awarded substantial recent leases that will solidify its federal occupancy into the future, including the recent award of a 370,000 SF U.S. Marshals Service lease.
NGP is now investing its sixth fund devoted to government-leased properties. It has, so far, purchased four buildings under this new fund, yet it also retains control of the 42 properties in its fifth fund, which has recapitalized for long-term ownership. Having accumulated almost 3.2 million federally leased square feet, this veteran government property investor remains near the top of our annual list.
LCOR appears on our list this year (and every year) based on its role as the asset manager for an investment group of high net-worth individuals that own the 2.4 MSF headquarters of the U.S. Patent and Trademark Office (PTO), the largest GSA lease in the United States. The PTO lease spans five office buildings in Alexandria, Va. LCOR developed this campus in 2003.
7. Brookfield Office Properties
Brookfield Office Properties (NYSE: BPO) is among the world’s largest property investors. In the United States alone, Brookfield has more than 40 MSF of office properties under management. Yet, despite its size, Brookfield appears on this Top 10 list for the first time, primarily because we now tally all federal (non-Postal Service) leases. In addition to a sizable GSA lease portfolio, Brookfield is landlord to several agencies with statutory leasing authority including the Transportation Security Administration, the Pension Benefit Guaranty Corporation and the Smithsonian Institution.
8. Boyd Watterson
No firm has been buying government properties at a faster clip than Boyd Watterson (formerly investing under the name of Titanium Asset Management Corp). Since we published our Top 10 last year, Boyd Watterson has closed on 20 new federally leased properties, earning a spot on this year’s list. The firm’s two government property funds are now invested in 60 buildings totaling 2.1 MSF.
9. UrbanAmerica Advisors
UrbanAmerica has been one of the largest U.S. federal property owners since purchasing the 15-building Rubicon America Trust portfolio in 2008. Last year, UrbanAmerica sold five of those properties, causing it to move down our ranking from No. 4 to No.9. Its remaining properties — some of which are now partially or fully vacant — are being marketed for sale, making it likely that this spot will open to a fresh face next year.
10. Saban Capital Group
Los Angeles-based Saban Capital remains among the largest federal property owners, despite the sale of two buildings earlier this year. The private equity firm run by entertainment and media billionaire Haim Saban owns 19 federal government-leased buildings. In total, the portfolio contains a bit more than 2 MSF of federally leased space.
Kurt Stout is the national leader of Colliers International’s Government Solutions practice group, which provides government real estate services to private investors and federal agencies. He also writes about federal real estate on his Capitol Markets team blog. You can contact Kurt by email or on Twitter.