Digital Realty has agreed to purchase the ownership interests held by Blackstone-managed funds in three Northern Virginia data centers for approximately $3.5 billion, a cash-and-stock transaction that will give the operator 100% control of facilities totaling 288 MW of IT capacity.
What Is Being Acquired
The deal covers 80% ownership interests in two 96 MW data centers located in Manassas, Virginia, and a 50% ownership interest in a third 96 MW facility in Sterling, Virginia. At full ownership, the assets are valued at roughly $7.8 billion, inclusive of assumed debt and remaining capital expenditures needed to complete development. Digital Realty will pay approximately $1.2 billion in cash and approximately $2.3 billion in common stock, with the transaction expected to close June 30.
The buyback stems from a 2023 joint venture in which Digital Realty and Blackstone partnered to develop hyperscale data centers across Northern Virginia, Paris, and Frankfurt. Under that arrangement, Blackstone took on majority ownership interests while Digital Realty handled development and operations. The two companies said they will continue partnering on the remaining joint venture assets in those markets.
Portfolio Details
All three data centers are fully leased to investment-grade hyperscale tenants under leases averaging 15 years. Key financial characteristics of the portfolio include:
- Blended average customer credit rating of AA-
- Average annual rent escalators of 3.6%
- Two facilities expected to stabilize in the first half of 2027, with the third in the first half of 2028
Digital Realty’s CFO indicated the purchase is expected to be accretive to Core Funds From Operations per share in both 2027 and 2028 as development completes and rental revenue comes online.
Strategic Context
Industry analysts view the transaction as a straightforward scale play in an environment where AI workloads are driving unprecedented demand for hyperscale infrastructure. John Dinsdale, chief analyst at Synergy Research Group, noted that buying back joint venture interests is a common capital allocation move for large data center operators when balance sheet conditions allow it. He observed that operators ideally prefer full ownership for better operational control, but joint ventures remain a practical tool for managing financial constraints.
Steven Dickens of HyperFrame Research pointed out that full ownership of these assets gives Digital Realty more deployable power and space at a moment when demand is accelerating, and that the company’s work on cross-cloud interconnect services strengthens its position further up the AI infrastructure stack.
Dickens also raised a question worth noting for the broader market: the sale may indicate that Blackstone sees the long-term return profile of data center assets converging toward utility-like yields, prompting a reallocation toward higher-margin opportunities.
For hosting professionals and infrastructure buyers, the consolidation of these assets under a single operator typically simplifies procurement relationships and can accelerate capacity availability timelines at those facilities.