Digital Realty falls 5% after taking $3.5 billion stake in Blackstone's Virginia data centers

Digital Realty announced its acquisition of a $3.5 billion stake in three data centers from asset manager Blackstone, leading to a 5% drop in its stock during premarket trading. The Austin-based global data center firm will pay $1.2 billion in cash and $2.3 billion in shares for the data centers, which are valued at a total of $7.8 billion. The transaction was expected to finalize on Tuesday.

The deal involves Digital Realty purchasing Blackstone's 80% interest in two 96-megawatt data centers situated in Manassas, Virginia, and a 50% interest in one 96-megawatt data center located in Sterling, Virginia. According to Digital Realty's chief investment officer, Greg Wright, this transaction represents the next phase of its partnership with Blackstone, enhancing its ownership of fully leased, high-quality hyperscale assets and supporting its growth strategy in the strategic private capital platform.

Digital Realty aims to increase its presence in Virginia, recognized as the world's largest data center market. Industry reports, including one from JLL, indicate strong demand, with 92% of North American data center capacity under construction already pre-committed. This demand is primarily fueled by major hyperscalers like Amazon, Microsoft, Meta, and Google, who are allocating significant capital expenditures towards AI infrastructure, often relying on private equity and debt for financing.