Digital Realty and Blackstone have announced a joint venture to establish four hyperscale data center campuses across three metro areas on two continents, specifically Frankfurt, Paris, and Northern Virginia. According to the official release, the development, valued at approximately USD 7 billion, aims to support a total IT load of 500 megawatts (MW) upon completion.
Investment in Data Centers
Blackstone-affiliated funds, led by Infrastructure, Real Estate, and Tactical Opportunities, will acquire an 80 percent ownership interest in the joint venture, contributing an initial capital of around USD 700 million. Digital Realty will maintain a 20 percent interest and manage the development and day-to-day operations for which it will receive customary fees. Subsequent to closing, the joint venture parties will fund their pro rata share of the remaining development costs, according to the official release.
Construction and Development Phases
The four campuses will reportedly house 10 data centers, with 46 MW currently under construction and 33 percent pre-leased. The remaining capacity is in various pre-construction phases, aligned with customer demand. Approximately 20 percent of the potential IT load is expected by 2025, with the balance scheduled for delivery in 2026 and beyond.
Digital Realty said, "The company is focused on executing on the sizable opportunity that lies ahead and this partnership helps to accelerate the monetization of nearly 20 percent of our industry-leading land bank."
"Data centers 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 center operator in Digital Realty is another example of how we are investing behind this trend," said Blackstone.
The joint venture is scheduled to close in two stages during the first half of 2024, pending regulatory approvals and customary closing conditions.