Somewhere in the second read of the annual report, square feet stopped mattering
I read two data center REIT annual reports over three weeks. Read each one twice, because that's how I do everything. Somewhere in the second pass I started counting words, and the count is what fixed the sector in my head. Square feet showed up a handful of times, mostly in property tables. Megawatt showed up constantly, in the leasing discussion, in the development pipeline, in the risk factors, in the part where they talk about what they can't build yet.
That's when it landed that these companies sell electricity delivered to a rack in a room they maintain. The building is packaging.
The other thing I didn't understand was a phrase in the leasing section, booked not billed. Leases signed, rent not yet started, because the space or the power isn't ready. There's a whole schedule of it with commencement years stretching out ahead. So I did something I've never done. I called the investor relations number listed at the back of the report.
A person answered. He asked what firm I was with and I said nobody, I'm just a person who reads these. There was a pause where I assumed the call was over. Then he spent twenty minutes explaining backlog timing to me, including why a signed lease with a 2028 commencement tells you something about power delivery schedules that the current occupancy number doesn't.
I didn't buy anything that week. I did stop reading real estate as buildings, which for me is a bigger change.