Blackstone is offloading its stakes in three data centers located in Northern Virginia to Digital Realty in a deal valued at $3.5 billion. Digital Realty will pay Blackstone funds $1.2 billion in cash and issue $2.3 billion in its shares. This transaction will increase Digital Realty's ownership in these fully leased, high-quality hyperscale assets, which were part of a joint venture established by the two companies in 2023.
The specific assets involved include Blackstone's 80% interest in two 96-megawatt data centers in Manassas, Virginia, and a 50% interest in a 96-megawatt data center in Sterling, Virginia. These facilities are 100% leased to three distinct investment-grade hyperscale customers. The total gross value of the assets is estimated at $7.8 billion, including assumed debt and remaining capital expenditure. Two of the data centers are expected to stabilize in the first half of 2027, with the third stabilizing in the first half of 2028.
This move strengthens Digital Realty's presence in Northern Virginia, which is considered the world's largest data center market, experiencing surging demand due to cloud computing and AI. Digital Realty's Chief Investment Officer, Greg Wright, stated that this transaction represents the "next phase" of their relationship with Blackstone, allowing them to expand their portfolio of hyperscale assets. Blackstone and Digital Realty will continue their collaboration on other data center investments in Northern Virginia, Paris, and Frankfurt. Matt Mercier, Digital Realty's CFO, expects the transaction to be accretive to Core FFO per share in 2027 and 2028.
The sale also comes at a time when there's increasing local opposition to sprawling data center developments in Northern Virginia. Other projects, including one by Blackstone's QTS and another by Compass Datacenters (backed by Brookfield Asset Management), have faced significant community pushback. However, the data centers involved in this sale are fully leased, which makes them a valuable acquisition for Digital Realty.
