Report: AOL to Sell Data Centers, Cut Ops Staff

UPDATE: The reports cited in this story were not accurate. See our additional coverage for more information.

AOL is planning to sell two of its data centers in northern Virginia and reduce its operations staff, according to reports in Valleywag and Silicon Alley Insider. The reports suggest AOL will sell its Manassas Tech Center and Dulles Tech Center, which between them comprise more than 400,000 square feet of finished data center space. The company will reportedly downsize its staff and outsource some operations duties to Emcor Group.

Why sell the data centers? Northern Virginia has been a hot data center market, where the industry's major players have been in expansion mode. Digital Realty Trust (DLR), Equinix (EQIX), DuPont Fabros (DFT), CRG West and Power Loft all have active data center development projects in northern Virginia. But that also means there's already a lot of brand-new space seeking tenants.

One option for AOL is a sale-leaseback, in which a property owner sells a building to a second party, while agreeing to continue to lease space in the building. The transaction generates cash for the former owner (now the tenant), and provides the new owner steady rent from the lease and a tenant with a strong credit rating. Digital Realty Trust has a track record of buying properties with tenants, and CRG West recently said it is targeting sale/leaseback arrangements that can help companies reduce the capital requirements of their data center operations.

AOL has a track record of finding buyers for its surplus data centers. In 2005 DuPont Fabros bought a former AOL data center for $58 million, which is now the company's VA4 data center.

Here's an overview of the facilities being discussed: