Blackstone grows data centre portfolio in $7bn venture with Digital Realty

Blackstone and Digital Realty have joined forces to develop four hyperscale data centre campuses in Europe and the US worth around $7bn (€6.5bn).

Blackstone is investing an initial $700m through its infrastructure, real estate and tactical opportunities funds to acquire an 80% stake in the newly created joint venture.

NYSE-listed Digital Realty, which will hold the remaining 20% interest in the partnership, said the venture helps it to “accelerate the monetisation of nearly 20%” of its land bank.

In the coming years, the two firms plan to contribute their proportionate share of the remaining costs to establish the four data centre campuses in Frankfurt, Paris and Northern Virginia.

The campuses are expected to accommodate the development of 10 data centres capable of handling 500MW of potential workload.

The companies said Digital Realty will manage the development and day-to-day operations of the joint venture, for which it will receive customary fees.

Andy Power, president and CEO of Digital Realty, said by partnering with Blackstone, 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”.

Power added: “Digital Realty is focused on executing on the sizable opportunity that lies ahead and this partnership helps to accelerate the monetisation of nearly 20% of our industry-leading land bank.”

Greg Wright, Digital Realty’s CIO, said: “Partnering with Blackstone marks the culmination of a record year of capital recycling and aptly reflects the shift in our funding strategy, to diversify our sources of capital and bolster our balance sheet in order to capitalise on the significant opportunity that lies ahead.”

Jon Gray, president and COO of Blackstone, said: “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.”

In a joint statement, Greg Blank, senior managing director at Blackstone Infrastructure, and Mike Forman, managing director at Blackstone Real Estate, said: “Blackstone’s deep pools of capital and extensive sector experience position us to capitalise on the explosive growth in data.”

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