New York and San Francisco, Blackstone Inc. (NYSE: BX) and Digital Realty (NYSE: DLR) have announced a strategic joint venture with plans to construct four hyperscale data center campuses in key global locations, responding to the soaring demand for data center capacity driven by cloud services and artificial intelligence (AI) advancements.
With an estimated cost of nearly $7 billion, this ambitious project will see Blackstone investing $700 million for an 80% ownership stake, while Digital Realty will retain the remaining 20% interest. The new data centers are projected to provide approximately 500 megawatts (MW) of IT load capacity over the next several years.
Expanding digital infrastructure to meet growing demand
Development of facilities accounting for 46 MW is already underway, with a third of that capacity pre-leased to clients. This initial phase represents a significant step towards expanding global digital infrastructure capabilities to accommodate the ever-increasing demand for data processing, storage, and connectivity.
Andy Power, the Chief Executive Officer of Digital Realty, expressed confidence that the collaboration with Blackstone will significantly satisfy growing customer needs for hyperscale infrastructure, backed by substantial private capital pools. The move comes at a time when businesses across various industries are increasingly relying on hyperscale data centers to support their digital operations, particularly in the realms of cloud computing and AI.
Jon Gray, Chief Operating Officer of Blackstone, highlighted the rising demand for hyperscale data centers as a direct result of increased cloud adoption and AI innovations. As organizations leverage cloud services and harness the power of AI for data analytics and decision-making, the need for secure, scalable, and efficient data center facilities has become paramount.
The global reach of the joint venture
The joint venture between Blackstone and Digital Realty is set to have a global impact, with data center campuses planned in key strategic locations. Frankfurt, Paris, and Northern Virginia have been identified as the primary sites for development, placing these hyperscale facilities at the heart of some of the world’s most interconnected and data-driven regions.
The deal is expected to close in two stages in early to mid-2024, pending customary regulatory approvals. Once completed, the partnership will accelerate the delivery of critical digital infrastructure to businesses and organizations that rely on high-performance data center services to meet the demands of an increasingly digital and data-intensive world.
PlatformDIGITAL®: Critical operational management
To ensure seamless operation and management of the new data center developments, the global platform known as PlatformDIGITAL®, operated by Digital Realty, will play a pivotal role. PlatformDIGITAL® is designed to provide robust and reliable operational management solutions for data centers, enhancing efficiency, security, and scalability for the businesses that rely on these facilities.
Legal advisement for this venture is being provided by Latham & Watkins for Digital Realty and Simpson Thacher & Bartlett LLP for Blackstone. These legal teams are working diligently to navigate the complex regulatory landscape and facilitate the successful execution of this strategic joint venture.
