Digital Realty buys $3.5bn Blackstone data centers

Digital Realty (DLR) has agreed to purchase Blackstone’s (BX) stakes in three Northern Virginia data centers for total consideration of $3.5 billion. The payment will consist of $1.2 billion in cash and $2.3 billion in Digital Realty shares, based on the company’s June 29, 2026 closing stock price. The transaction covers Blackstone’s blended 64% equity interest in the assets, which together are shown at a gross value of $7.8 billion at 100% share.

The portfolio comprises three 96-megawatt facilities, totaling 288 megawatts of IT capacity. Digital Realty will acquire an 80% interest in two 96-megawatt data centers in Manassas, Virginia, and a 50% interest in a 96-megawatt data center on the Digital Dulles campus in Sterling, Virginia. The expected initial stabilized capitalization rate for the assets is over 6.5%.

The three data centers are fully leased and 100% occupied by three distinct investment-grade hyperscale customers. These customers are on 15-year lease agreements, providing long-term revenue visibility for the portfolio. The leases feature a blended average AA- customer credit rating, underscoring the tenants’ financial strength.

The contracts also include 3.6% annual rent escalators, which are expected to drive organic rental growth over the lease terms. The assets are currently in development, with two of the data centers expected to stabilize in the first half of 2027 and the third in the first half of 2028. Stabilization is anticipated to align with the commencement of full rental income from the projects.

Digital Realty stated that the transaction is expected to be accretive to Core FFO per share in each of 2027 and 2028, as development is completed and rents commence. The deal structure combines cash and stock, allowing Digital Realty to secure a significant interest in high-capacity facilities while managing its capital outlay. At 100% share, the $7.8 billion valuation and cap rate above 6.5% frame the financial profile of the investment.

The acquisition is expected to close on June 30, 2026, subject to customary closing conditions. The timeline from signing to closing and then to stabilization in 2027 and 2028 sets out a multi-year path for integration and income ramp-up. The fully leased status and long-term contracts are intended to support cash flow once the assets are fully stabilized.

In connection with the transaction, affiliates of Blackstone have launched an underwritten registered public offering of $2,346 million of non-voting Digital Realty common stock. These shares will be issued to Blackstone only upon closing of the acquisition, and the offering is explicitly conditioned on that closing. Morgan Stanley (MS) is acting as the sole underwriter for the offering.

Digital Realty will not receive any proceeds from this stock sale, as the transaction represents a secondary offering by Blackstone affiliates. The structure means Blackstone’s monetization of the Digital Realty shares is tied directly to the completion of the data center acquisition. Together, the acquisition and related equity sale define both parties’ financial positioning around these Northern Virginia assets.