Blackstone-affiliated funds led by Infrastructure, Real Estate and Tactical Opportunities will work with Digital Realty to develop four hyperscaler data centre campuses in Frankfurt, Paris and Northern Virginia.
The developments are expected to support approximately 500 megawatts (MW) of total IT load when fully operational.
"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," said Andy Power, president and CEO of Digital Realty.
Blackstone will acquire an 80% ownership interest in the joint venture for approximately $700 million of initial capital contributions, while Digital Realty will maintain a 20% interest.
After closing, the joint venture parties will fund their pro rata share of the remaining development costs.
Digital Realty will manage the development and day-to-day operations of the joint venture, for which it will receive customary fees.
"Partnering with Blackstone marks the culmination of a record year of capital recycling and aptly reflects the shift in our funding strategy, to diversify our sources of capital and bolster our balance sheet in order to capitalise on the significant opportunity that lies ahead," Greg Wright, Chief Investment Officer of Digital Realty, added.
Development of the four campuses is expected to cost approximately $7 billion over several years.
The campuses are planned to support the construction of 10 data centres with approximately 500 MW of potential IT load capacity.
Of this capacity, 46 MW is under construction and is 33% pre-leased.
"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," Power continued.
Digital Realty said the remaining land capacity is in varying phases of pre-construction and is expected to be developed to meet customer demand.
Approximately 20% of the total potential IT load capacity is expected to be delivered through 2025, with the rest expected to be delivered in 2026 and beyond.
Latham & Watkins is serving as Digital Realty's legal counsel. Simpson Thacher & Bartlett LLP is acting as Blackstone's legal counsel.
The joint venture is scheduled to close in two stages over the course of the first half of 2024, subject to certain regulatory and other approvals, as well as other customary closing conditions.
"Blackstone's deep pools of capital and extensive sector experience position us to capitalise on the explosive growth in data. We look forward to partnering with Digital Realty to develop high-quality data centres in top markets around the world," executives from Blackstone said.
