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Blackstone (NYSE:) Inc. and Digital Realty (NYSE:) have announced a joint venture today, aiming to construct four hyperscale data center campuses in Frankfurt, Paris, and Northern Virginia. The partnership is a strategic response to the increasing demand for data center capacity driven by cloud services and artificial intelligence (AI) advancements.
The ambitious project, with an estimated cost of nearly $7 billion, will see Blackstone investing $700 million for an 80% ownership stake. Digital Realty will retain the remaining 20% interest. The data centers are projected to provide approximately 500 megawatts (MW) of IT load capacity over the next several years.
As of now, development of facilities accounting for 46 MW is already underway, with one-third of that capacity pre-leased to clients. This initial phase lays the groundwork for what will eventually be a significant expansion of global digital infrastructure capabilities.
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. Jon Gray, COO of Blackstone, highlighted the rising demand for such facilities as a direct result of increased cloud adoption and AI innovations.
The deal is expected to close in two stages in early to mid 2024, pending customary regulatory approvals. The global platform known as PlatformDIGITAL®, operated by Digital Realty, will provide critical operational management for the new developments. Legal advisement for this venture is being provided by Latham & Watkins for Digital Realty and Simpson Thacher & Bartlett LLP for Blackstone.
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