Blackstone-affiliated funds, specializing in infrastructure, real estate, and tactical opportunities, will lead the joint venture, contributing approximately $700 million in initial capital to acquire an 80% ownership interest, while Digital Realty will retain a 20% interest.
These developments are projected to support around 500 megawatts (MW) of total IT load upon the full build-out of all campuses. The four hyperscale data center campuses, with an estimated development cost of $7 billion over the next several years, will facilitate the construction of 10 data centers, boasting a potential IT load capacity of approximately 500 MW. Presently, 46 MW is under construction and is 33% preleased. The remaining land capacity is in various stages of preconstruction and will be developed based on customer demand. Around 20% of the total potential IT load capacity is anticipated to be delivered by 2025, with the remainder expected in 2026 and beyond.
Digital Realty will oversee the development and day-to-day operations of the joint venture, receiving customary fees for its services. The collaboration with Blackstone, recognized as the world’s largest alternative asset manager, enables Digital Realty to meet the escalating demand from hyperscale customers by accessing significant private capital.
Andy Power, President and CEO of Digital Realty, expressed enthusiasm about partnering with Blackstone, citing the strategic acceleration of the monetization of nearly 20% of their industry-leading land bank. Greg Wright, Chief Investment Officer of Digital Realty, highlighted the partnership as a result of a record year of capital recycling and emphasized the shift in their funding strategy to diversify capital sources and fortify the balance sheet.
Jon Gray, President and COO of Blackstone, underlined the unprecedented demand growth in data centers, driven by cloud adoption and the AI revolution. He described this transaction as an example of Blackstone’s commitment to investing in digital infrastructure, considering it one of their highest conviction investment themes.
The joint venture is set to conclude in two stages during the first half of 2024, subject to regulatory approvals and other customary closing conditions.