Blackstone will acquire an ownership stake of 80% in the JV for about $700m of initial capital contributions while cloud and carrier-neutral data centre, colocation and interconnection solutions provider Digital Realty will maintain a 20% interest
Blackstone to establish $7bn hyperscale data centre development JV with Digital Realty. (Credit: Jonathan Hammond from Pixabay)
Blackstone-affiliated funds led by Infrastructure, Real Estate and Tactical Opportunities have agreed to create a joint venture (JV) with Digital Realty to develop four hyperscale data centre campuses across three tier 1 metros in Europe and North America.
To be developed in Frankfurt, Paris and Northern Virginia, the four hyperscale data centre campuses entail a total estimated development cost of about $7bn over the next several years.
Blackstone will acquire an ownership stake of 80% in the JV for about $700m of initial capital contributions while cloud and carrier-neutral data centre, colocation and interconnection solutions provider Digital Realty will maintain a 20% interest.
Digital Realty will also manage the development and daily operations of the JV. For this, the firm will receive customary fees.
Following the completion of the deal, the JV will fund their pro rata share of the remaining development costs.
The proposed campuses will support the construction of 10 data centres with nearly 500MW of potential IT load capacity.
Blackstone president and chief operating officer Jon Gray 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.”
According to the parties, 46MW of the capacity is under construction while 33% is pre-leased.
The remaining land capacity is in varying phases of pre-construction and will be developed to address customer demand.
Both companies aim to deliver approximately 20% of the total potential IT load capacity through 2025, with the remaining to be supplied in 2026 and later.
Digital Realty president and CEO Andy Power said: “By partnering with Blackstone, the world’s largest alternative asset manager, 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.
“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.”
Subject to certain regulatory and other approvals along with customary conditions, the JV is anticipated to close in two stages throughout the first half of 2024.
Latham & Watkins acts as Digital Realty’s legal counsel while Simpson Thacher & Bartlett serves as Blackstone’s legal counsel.