Digital Realty and Blackstone Ink $7 bn JV to Develop Data Center Campuses

Digital Realty, a provider of data center solutions, has joined forces with Blackstone to establish a joint venture aimed at developing four hyperscale data center campuses across key metro areas on two continents.
Digital Realty data center locationsKey Highlights of the Partnership:

Global Expansion: The joint venture, led by Blackstone-affiliated funds focused on Infrastructure, Real Estate, and Tactical Opportunities, aims to spearhead the development of four hyperscale data center campuses across Frankfurt, Paris, and Northern Virginia.

Significant Capacity: These developments are set to support an estimated total IT load of around 500 megawatts (MW) upon the completion of all campuses, fostering substantial capacity growth in the digital infrastructure sphere.

Financial Structure: Blackstone will secure an 80 percent ownership interest in the joint venture through an initial investment of approximately $700 million, while Digital Realty will retain a 20 percent stake in the data center venture. Both parties will subsequently contribute pro rata shares for the remaining development costs.

Overview of Data Center Campus Development:

Scale and Cost: The total estimated development cost for the four campuses is approximately $7 billion, reflecting a significant commitment to constructing cutting-edge data center infrastructure.

Projected Timeline: The campuses are projected to host the construction of 10 data centers, accounting for approximately 500 MW of potential IT load capacity. Presently, 46 MW are under construction, with a 33 percent pre-lease rate. The remaining capacity is poised for development in response to burgeoning customer demand.

Development Phases: Approximately 20 percent of the total potential IT load capacity is anticipated to be delivered by 2025, with the remainder expected beyond 2026.

Insights from Leadership:

Andy Power, President and CEO of Digital Realty, emphasized the partnership’s ability to meet heightened customer demands, stating, “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, highlighted data centers’ exceptional demand growth and the firm’s investment conviction in digital infrastructure.

Closing Details and Future Plans:

The joint venture is slated to conclude in two stages within the first half of 2024, subject to regulatory approvals and customary closing conditions.

Greg Blank from Blackstone Infrastructure and Mike Forman from Blackstone Real Estate expressed enthusiasm about capitalizing on the substantial growth in data infrastructure and partnering with Digital Realty to develop top-tier data centers worldwide.

The collaboration between Digital Realty and Blackstone represents a strategic move to leverage resources, expertise, and capital in tapping into the burgeoning opportunities presented by the surging demand for advanced data infrastructure.

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