Realty Income forms data center JV with $6B in seed assets

Realty Income Corporation (NYSE: O) announced a joint venture with Cloud Capital and an unnamed global institutional investor to acquire a three-asset hyperscale data center portfolio in Northern Virginia, according to a company press release.

Realty Income expects to invest up to $1.4 billion for a 45% equity stake in the portfolio, with initial investments of approximately $700 million expected between the second and third quarters of 2026. The seed assets are valued at over $6 billion.

The portfolio consists of one stabilized asset and two assets under development, all located in Northern Virginia's "data center alley." The stabilized asset is fully leased to an investment-grade hyperscale tenant under a long-term triple-net lease. Realty Income has agreed to acquire interests in the two development assets upon completion, subject to certain conditions.

The leases across the portfolio run 15 to 20 years and include annual rent escalators. Cloud Capital will hold a minority stake, while CloudHQ, a data center developer and operator affiliated with Cloud Capital, will provide property management and development services.

The joint venture is structured as programmatic, meaning it provides a framework for Realty Income to pursue additional data center investments in the United States and Europe.

"Today's announcement affirms the strength of our business model and its ability to translate across sectors, including digital infrastructure," said Sumit Roy, President and Chief Executive Officer of Realty Income.

Moelis & Company served as financial advisor and Latham & Watkins served as legal counsel to Realty Income. Goldman Sachs & Co. served as financial advisor and Jones Day served as legal counsel to Cloud Capital.

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