TPG Acquires 80 Percent Stake in Digital Realty’s Northern Virginia Data Centers

Data center provider Digital Realty and real estate investment firm TPG have established a strategic joint venture to strengthen their foothold in Northern Virginia's hyperscale data center market.


  • TPG acquires an 80 percent stake in three data centers valued at USD 1.5 billion.
  • Digital Realty maintains a minority interest and manages day-to-day operations.
  • Partnership aims to optimize capital structure and meet growing demand for data centers in the region.

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TPG Acquires 80 Percent Stake in Digital Realty's Hyperscale Data Centers

Digital Realty partnered with TPG Real Estate, the real estate investment platform of TPG, to establish a Joint Venture (JV). In this partnership, TPG will acquire an 80 percent majority stake in three stabilized hyperscale data centres in Northern Virginia, collectively valued at USD 1.5 billion, according to the joint statement.

Also Read: Orange Romania Installs Solar Panels on Data Center in Timisoara

TPG Acquires Majority Stake

Under this collaboration, Digital Realty will retain a minority interest in the portfolio while overseeing day-to-day operations. The move comes as a strategic effort to strengthen and diversify Digital Realty's capital sources through an experienced partner, further enhancing the efficiency of its balance sheet, said Digital Realty.

The assets related to the JV, located in Northern Virginia, the largest and most interconnected data centre hub globally, are strategically positioned to address surging demand for data centres. TPG Real Estate anticipates that recent advancements in artificial intelligence will further fuel the growth of this sector.

"We are excited by the outlook for the Ashburn market and look forward to working alongside a world-class partner in Digital Realty," said TPG Real Estate.

Also Read: NorthC Expands with Fourth Data Center in Winterthur, Switzerland

Hyperscale DCs Capacity

The three hyperscale data centres contributing to the joint venture have a combined IT capacity of approximately 104 megawatts and are predominantly leased by investment-grade customers. According to the official release, the value of the transaction is estimated at a cap rate of around 6.0 percent based on annualized in-place cash NOI on June 30, 2023, net of signed leases and known move-outs.

Digital Realty

Digital Realty is a global provider of cloud and carrier neutral data centers. The company is set to receive approximately USD 1.3 billion of gross proceeds from the joint venture and associated financing. The funds will be utilized to pay down debt, cover transaction-related expenses, and support general corporate purposes.

Also Read: Flexential Announces Data Center Capacity Expansion in Atlanta and Hillsboro, Adding Over 110 MW

The investment in the Portfolio is executed through TPG Real Estate Partners, TPG Real Estate's dedicated opportunistic real estate fund series.

Reported By

From Arts and Journalism background, Yashika closely monitors developments and updates in OTT Space.

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