In a strategic move set to redefine the landscape of digital infrastructure, Blackstone-affiliated funds and Digital Realty have announced a groundbreaking partnership aimed at constructing four colossal hyperscaler data centre campuses across key global hubs.
With a projected investment of approximately $7 billion, the joint venture spearheaded by Blackstone’s Infrastructure, Real Estate, and Tactical Opportunities funds in collaboration with Digital Realty is poised to revolutionize the data centre industry.
The development’s focal points span Frankfurt, Paris, and Northern Virginia, catering to the exponential surge in demand from hyperscale customers. These campuses are slated to support a staggering 500 megawatts of total IT load capacity once fully operational.
Digital Realty’s President and CEO, Andy Power, expressed enthusiasm, stating, “By partnering with Blackstone, the world’s largest alternative asset manager, Digital Realty is better equipped to meet the burgeoning demands of hyperscale clients by accessing a deep pool of like-minded private capital.”
Blackstone Inc., headquartered in New York City, is a prominent American firm specializing in alternative investment management. Over the past thirty years, Blackstone’s private equity arm has stood out as a major player in financing leveraged buyouts, while its real estate division has shown a strong penchant for acquiring various commercial real estate properties.
Blackstone is slated to secure an 80% ownership stake in the venture by injecting an initial capital of approximately $700 million. Meanwhile, Digital Realty retains a 20% interest, maintaining its involvement in the partnership.
Greg Wright, Chief Investment Officer of Digital Realty, emphasized, “Partnering with Blackstone signifies a strategic shift in our funding strategy, diversifying our capital sources and fortifying our balance sheet to capitalize on immense forthcoming opportunities.”
The ambitious plan involves constructing ten cutting-edge data centres, with a segment of 46 megawatts already under construction and 33% pre-leased. Digital Realty anticipates the completion of approximately 20% of the total potential IT load capacity by 2025, with the remaining anticipated to come online by 2026 and beyond.
Leveraging Digital Realty’s expertise, the company will oversee the day-to-day operations and development of the joint venture. The partnership further marks a milestone in the company’s pursuit to monetize nearly 20% of its expansive land bank while catering to evolving customer demands.
The legal facets of this monumental venture see Latham & Watkins advising Digital Realty and Simpson Thacher & Bartlett LLP representing Blackstone.
The closure of this transformative deal is scheduled in two stages through the first half of 2024, subject to regulatory approvals and customary closing conditions.
Executives from Blackstone echoed excitement about their significant involvement, stating, “Blackstone’s deep pools of capital and extensive sector experience position us to capitalize on the explosive growth in data. We look forward to partnering with Digital Realty to develop high-quality data centers in top markets worldwide.”
The venture represents a paradigm shift in the digital infrastructure realm, signaling an era of collaboration and innovation to meet the escalating demands of a data-driven world.
Article written by VOLF.TV TEAM , content strategy and produced by Manjeet Bhatt.
