Real Estate

3 Months Ended

Mar. 31, 2023

5. Real Estate

The following table summarizes the Company's real estate which is held by subsidiaries in the Operating segment.


(In thousands)	March 31, 2023		December 31, 2022
Land	$	257,588	$	257,588
Buildings and improvements	1,738,190		1,573,605

Data center infrastructure	4,510,678		4,427,150


Construction in progress	283,146		395,393
	6,789,602		6,653,736
Less: Accumulated depreciation	(824,795)		(732,438)
Real estate assets, net	$	5,964,807	$	5,921,298

Real Estate Depreciation

Depreciation of real estate held for investment was $92.4 million and $79.1 million for the three months ended March 31, 2023 and 2022, respectively.

Property Operating Income

Components of property operating income are as follows.


	Three Months Ended March 31,
(In thousands)	2023		2022
Lease income:
Fixed lease income	$	177,420	$	160,324
Variable lease income	32,982		23,847
	210,402		184,171
Data center service revenue	20,525		18,340
	$	230,927	$	202,511

For the three months ended March 31, 2023 and 2022, property operating income from a single customer accounted for approximately 21% and 20%, respectively, of the Company's total revenues from continuing operations, or approximately 15% for both periods of the Company's share of total revenues from continuing operations, net of amounts attributable to noncontrolling interests in investment entities.

Commitment for Tenant Allowance

In connection with DataBank’s acquisition of a data center portfolio in March 2022 (Note 3), DataBank and the seller concurrently entered into a master lease agreement which provides that the seller leases from DataBank land acquired in the transaction. If the seller does not exercise its rights to early terminate the lease, the seller is obligated to develop a data center facility on a portion of the acquired land and DataBank is committed to provide the seller a tenant allowance of up to $37.5 million to finance the construction. In December 2022, the seller waived its right to terminate the lease with respect to the portion of the land subject to development. The seller will be responsible for undertaking the construction and any resulting overages. Title to the to-be constructed building, improvements and fixtures will be vested in the seller for the duration of the lease and transfers to DataBank thereafter. The timing of funding of DataBank’s commitment to the seller will be based on agreed upon milestones, with construction to be completed no later than January 1, 2026. DataBank expects to fund its commitment through future debt drawdowns. No amounts have been funded by DataBank to-date.