Digital Realty announced a $3.5 billion stake in three Blackstone-owned data centers in Northern Virginia, paying $1.2 billion in cash and $2.3 billion in shares for assets valued at $7.8 billion. Shares fell 5.4% in premarket trading on the news.
Digital Realty announced Monday it is purchasing a $3.5 billion stake in three Blackstone-owned data centers in Northern Virginia, sending its shares down 5.4% in premarket trading despite the company's stock carrying a 23% gain year-to-date.
The Austin-based data center operator will pay $1.2 billion in cash and $2.3 billion in shares for properties collectively valued at $7.8 billion. The transaction was expected to close Tuesday.
Under the terms of the deal, Digital Realty acquires Blackstone's 80% interest in two 96-megawatt data centers in Manassas, Virginia, and a 50% interest in one 96-megawatt data center in Sterling, Virginia.
The first two Manassas facilities are expected to reach stabilization in the first half of 2027, while the Sterling asset is projected to stabilize by the first half of 2028.
Digital Realty's chief investment officer, Greg Wright, described the transaction as the next phase of the company's partnership with Blackstone. In a Monday statement, Wright said the deal allows the firm to deepen its ownership in a portfolio of "fully leased, high-quality hyperscale assets" that extends its runway for growth and pipeline of product for the continued expansion of its strategic private capital platform.
The purchase deepens Digital Realty's footprint in Virginia, which has long been considered the world's largest data center market. Texas came close to surpassing Virginia's dominance, according to a February report from real estate firm JLL, underscoring how competitive the market for prime data center geography has become.
Vacancy in the sector is expected to remain tight. According to JLL, 92% of data center capacity currently under construction in North America is already pre-committed, a figure that points to continued supply constraints at least through 2030.
The transaction comes amid surging demand driven by major hyperscalers. Amazon, Microsoft, Meta, and Google have collectively committed close to $700 billion in capital expenditure this year for AI infrastructure buildout, according to the company's statement.
Private capital has become an increasingly prominent feature of that spending wave. Deals involving private equity, private credit, and debt in the data center space consistently reached above $10 billion last year, according to data from Preqin, as big tech looks to financing structures beyond its own balance sheets.
Digital Realty's premarket decline reflects investor scrutiny of the deal's price and share-based component, even as the underlying demand for hyperscale capacity in Northern Virginia shows little sign of softening ahead of the facilities' projected stabilization dates.
Marc Sabatini is a staff writer at TechEchelon covering enterprise software, cybersecurity, and the regulatory beats that shape both. He focuses on the deal flow and policy decisions that move markets.
More from Marc →The Bank for International Settlements warned in its Annual Economic Report that rising public debt, financial fragilities, renewed inflation pressures, and an uncertain AI investment boom are compounding risks to global economic stability.
U.S. shoppers spent more than $26.4 billion during Amazon's four-day Prime Day event, a 9.3% year-over-year increase, but falling average order sizes and discount-dependent spending point to a stretched consumer heading into the holiday season.
SpaceX is set to join the Nasdaq-100 index on July 7, making it one of the fastest additions in the index's history and triggering mandatory buying from more than $800 billion in funds that track the benchmark.
Written for readers who already know the basics — markets, AI, and the policy decisions that shape both.