BlackRock is to invest $4.9bn (€4.3bn) in the development of a 1GW data-centre campus in Texas after social media giant Meta selected the investment firm to become a partner in the project.
Funds managed by BlackRock will own an 80% stake in the El Paso campus, which is expected to cost $14bn to build. Meta will retain 20%.
Meta, founded by Mark Zuckerberg and owner of Facebook and Instagram, said it chose BlackRock “following a highly competitive process”. The social media giant revealed plans to build the El Paso facility in October last year.
The campus is projected to become operational in 2028 with 1GW of compute capacity. Meta said it would “play an essential role” in the development of its AI technologies.
Zuckerberg said the partnership would allow Meta “to move faster and at greater scale – pairing our deep expertise in designing and operating world-class data centres with one of the world’s leading infrastructure investors”.
Larry Fink, chairman and CEO of BlackRock, said: “Companies around the world are looking for long-term strategic partners to help develop their most important projects, and BlackRock is built to meet that need.”
The two firms have committed to fund their respective pro rata share of the approximately $14bn in total development costs for the buildings and long-lived power, cooling and connectivity infrastructure at the campus.
At financial close, Meta will contribute the venture land and construction-in-progress assets valued at approximately $2.3bn, and BlackRock will make a cash contribution of approximately $4.9bn.
Meta said it would receive a one-time distribution of approximately $1bn to align ownership stakes in accordance with the 80/20 ownership split. A portion of BlackRock’s investment will be funded with proceeds from a $12.5bn debt financing.
Meta will enter into lease agreements with the venture for use of the entire campus. The leases have a four-year initial term with four options to extend. Meta will also provide residual value guarantees (RVG) which have an aggregate threshold of approximately $13bn that decreases over time.
If certain conditions are met within the first 16 years of the lease term, Meta’s maximum RVG payment would equal any shortfall between the fair value at that time and the RVG threshold for the covered property.
Meta will provide construction management, administrative and property management services for the campus, and will be the initial sole occupant of the campus upon completion.
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