Digital Realty and Blackstone have teamed up on a major data centre venture that will see the development of four hyperscale campuses across Frankfurt, Paris, and Northern Virginia in the US.
The joint venture brings together the global provider of cloud and carrier-neutral data centres and Blackstone-affiliated funds led by infrastructure, real estate, and tactical opportunities.
Blackstone will acquire an 80% ownership stake for $700 mln (€649 mln), with Digital Realty retaining 20%.
The $7 bn (€6.5 bn) project involves building 10 data centres with a potential IT load capacity of 500 MW. Of this, 46 MW is already under construction and 33% pre-leased.
The land is in various stages of preparation for future development, with the pace depending on customer demand.
According to the delivery timeline, 20% of total capacity is expected by 2025, with the remaining 80% delivered in 2026 and beyond.
Andy Power, president and CEO of Digital Realty, said: ‘By partnering with Blackstone, the world’s largest alternative asset manager, Digital Realty is better able to deliver capacity to meet the burgeoning demand of our hyperscale customers, by accessing a deep pool of likeminded private capital. Digital Realty is focused on executing on the sizable opportunity that lies ahead and this partnership helps to accelerate the monetization of nearly 20% of our industry-leading land bank.’
Jon Gray, president & COO of Blackstone, added: ‘Data centres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution. Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted data centre operator in Digital Realty is another example of how we are investing behind this trend.’
Digital Realty will manage the development and day-to-day operations of the campuses.
The joint venture closing is expected in two phases across the first half of 2024, pending approvals and customary conditions.
Latham & Watkins acted as Digital Realty’s legal counsel, while Simpson Thacher & Bartlett legally assisted Blackstone.
This project significantly expands the available data centre infrastructure in key markets, supporting the growing demand for cloud computing and other advanced technologies.