With over 5,000 distinct owners of GSA-leased properties in the United States, there are a few that stand out above the rest. These ten investors, together, own properties that encompass a staggering 15% of the entire GSA lease inventory. Yes, you read that right - they control properties that house a significant portion of GSA's leased properties! In this article, we will explore these ten investors and shed light on their impressive portfolios.
The Ranking Criteria and Notes
We ranked these owners based on square footage, as it is the most reliable metric available to us. It's important to note that this ranking only includes GSA-leased properties and does not include buildings leased directly by agencies under their delegated, statutory, or independent authority. However, we acknowledge that these kinds of leases exist, and we will discuss how they might impact the rankings.
It's worth mentioning that we have only counted leases that have commenced. If a lease has been awarded but not yet started, it has not been considered for this list. Determining "ownership" can be challenging, as there are often equity partners involved behind the scenes. For this list, we have focused on the operating partners, the faces of these properties who ultimately manage the assets. However, we recognize that there may be equity partners with a larger ownership stake. Lastly, please keep in mind that this data is accurate as of Spring 2013, and changes may have occurred since then.
The Owners: Who Holds the Power?
1. Government Properties Income Trust (NYSE: GOV)
Leading the pack is the Government Properties Income Trust, which is the undisputed leader in the government-leased property sector. With GSA-leased properties in 31 U.S. states and the District of Columbia, they have a diverse portfolio ranging from small 10,000 square foot properties to massive half-million-square-foot structures. Although GOV has not made any property acquisitions in recent times, they have consistently been one of the most active buyers of government-leased buildings.
2. JBG Companies
JBG Companies, as the most active property developer in the Washington, DC market, naturally secures the second spot on our list. With a significant presence in GSA-leased properties and direct government leases, particularly with the NIH, JBG Companies has positioned itself as a major player. Notably, they have numerous ongoing GSA-leased development projects, including build-to-suits for prestigious institutions like the National Institute for Allergy and Infectious Diseases, the Social Security Administration, and the Department of Health and Human Services.
3. Vornado Realty Trust (NYSE: VNO)
Vornado Realty Trust, a $16.5 billion REIT, primarily focuses on holdings in New York and Washington, DC. Despite exposure to DoD tenancy, which has seen some vacancies due to BRAC, Vornado remains one of the largest owners of government-leased properties in the nation. This is due to the strategic location of many of their properties, situated near the Pentagon and just across the Potomac River from the District of Columbia.
4. UrbanAmerica Advisors
UrbanAmerica Advisors, a partnership between UrbanAmerica, L.P. and Behringer-Harvard, manages an investment portfolio consisting of 14 properties primarily leased by GSA. One of their flagship properties is a massive 1.05 million square foot logistics facility in Burlington, NJ. This facility is used by GSA's Federal Acquisition Service to store and ship supplies across the United States and internationally.
5. LCOR
LCOR makes this list with ownership of two notable projects. One of these projects is the U.S. Patent and Trademark Office headquarters, occupying a whopping 2.4 million square feet and holding the title of the largest GSA lease in the country. LCOR's other asset is the lease-construct project for the Nuclear Regulatory Commission (NRC). This 358,000 square foot building, located in Montgomery County, Maryland, is currently up for sale.
6. NGP V
NGP (formerly National Government Properties) has been a key investor in the government space for many years. Having raised and invested five funds solely focused on government properties, NGP's fifth fund is an impressive portfolio of "single tenant" GSA-leased buildings. Most buildings are less than 10 years old and have more than five years remaining on their leases. This exceptional portfolio is unlikely to be replicated anytime soon.
7. Saban Capital Group
Saban Capital Group, led by billionaire Haim Saban, has made significant investments in the government property sector. With the acquisition of a 21-property portfolio formerly owned by Record Realty Trust, Saban Capital Group became a major player in the GSA-leased asset market. Their portfolio spans from coast to coast across the United States, and they continue to actively acquire GSA-leased assets.
8. Boston Properties (NYSE: BXP)
Boston Properties, a $16 billion REIT, boasts substantial holdings in the Washington, DC market. Apart from a small GSA lease in Massachusetts, their government holdings primarily consist of 20 buildings in the District of Columbia and Northern Virginia. These holdings include prominent intelligence community agencies such as the CIA, the Director of National Intelligence, and the Defense Intelligence Agency. They also control the Virginia 95 business park, conveniently located near the new National Geospatial-Intelligence Agency headquarters.
9. Space Center, Inc.
Space Center, Inc., known for industrial development and third-party logistics, has emerged as one of the nation's leaders in subsurface industrial development. Their unique offering includes underground records storage facilities carved from limestone formations in the Kansas City suburbs. Providing the ideal cool and humidity-controlled environment, Space Center serves agencies like the National Archives and Records Administration, IRS, and the Social Security Administration.
10. HPI Group
HPI Group, a Charlotte-based real estate investor, manages investments for high net worth individuals. Since 1993, they have been purchasing government-leased assets and have accumulated a portfolio of 16 properties, with the majority fully leased by federal agencies. One notable property in their portfolio is the 388,000 square foot building located at 1301 S. Young Street in downtown Dallas, which houses HHS and SSA regional offices.
Honorable Mentions
Alongside the top ten investors, a few honorable mentions deserve recognition for their notable contributions to the government property sector:
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Brookfield Office Properties (NYSE: BPO): If we had included non-GSA federal leases in our rankings, Brookfield would have earned a high spot. They hold substantial GSA lease holdings along with direct contracts with TSA, SEC, the Pension Benefit Guaranty Corporation, and the Smithsonian Institution.
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Peterson Companies: Although they hold just two GSA leases, the Peterson Companies have constructed substantial facilities leased directly to intelligence agencies. Notably, they have developed a new campus for the CIA near Dulles Airport and a facility for the National Counterterrorism Center in McLean, Virginia.
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Corporate Office Properties Trust "COPT" (NYSE: OFC): COPT owns National Business Park near Fort Meade, the Maryland headquarters of the National Security Agency (NSA). Their business plan revolves around leasing to federal security agencies and their private-sector contractors. They have a significant presence near major U.S. intelligence agencies.
In conclusion, these ten investors and honorable mentions control a substantial portion of the government-leased properties in the United States. Their portfolios reflect their expertise, authority, trustworthiness, and experience in this sector. It's fascinating to see how these investors shape the landscape of government property, and their influence will continue to grow in the years to come.