Digital Realty Takes Greater Control of 288 MW Northern Virginia Data Center Portfolio

Digital Realty agreed to acquire Blackstone’s ownership interests in three hyperscale data centers in Northern Virginia, increasing its exposure to one of the world’s most important AI infrastructure markets. The transaction values the portfolio at approximately $7.8 billion and gives Digital Realty ownership of Blackstone’s blended 64% equity interest for $3.5 billion, consisting of $1.2 billion in cash and approximately $2.3 billion in newly issued Digital Realty shares. The portfolio includes three fully leased facilities totaling 288 MW of IT capacity, with two campuses in Manassas and one in Sterling, Virginia. Closing is expected on June 30, 2026.

The acquisition increases Digital Realty’s ownership of two 96 MW Manassas data centers from 20% to 100% and raises its ownership in a 96 MW Sterling facility from 50% to 100%. All three facilities are fully leased to three separate investment-grade hyperscale customers under 15-year contracts featuring annual rent escalators of approximately 3.6%. Two facilities are expected to reach stabilization during the first half of 2027, while the third is scheduled for completion in the first half of 2028. Digital Realty said the transaction is expected to increase Core FFO per share beginning in 2027 as development completes and rental income commences.

The announcement comes alongside Blackstone’s decision to monetize part of its consideration through a secondary public offering of 12.3 million Digital Realty shares priced at $185.00 per share. The shares represent stock received as part of the acquisition consideration, with Morgan Stanley serving as sole underwriter. Digital Realty will not issue additional capital beyond the shares already committed under the acquisition agreement and will receive none of the proceeds from the secondary offering.

• Portfolio valuation: $7.8 billion (100% enterprise value)
• Digital Realty purchase price: $3.5 billion
• Consideration: $1.2 billion cash plus $2.3 billion in Digital Realty shares
• Portfolio size: 288 MW of IT capacity
• Assets: Three hyperscale data centers (2 in Manassas, 1 in Sterling)
• Occupancy: 100% leased
• Customers: Three investment-grade hyperscale tenants
• Average customer credit quality: AA-
• Lease term: 15 years
• Annual rent escalators: 3.6%
• Two facilities expected to stabilize in 1H 2027; third in 1H 2028
• Secondary offering: 12.31 million Digital Realty shares at $185.00 per share

“We have developed a strong partnership with Blackstone through the successful ongoing development of these assets, and we continue to work together across the remaining data center investments in our joint ventures in Northern Virginia, Paris and Frankfurt,” said Greg Wright, Chief Investment Officer of Digital Realty.

🌐 Analysis

This transaction underscores how hyperscale AI infrastructure has become an institutional-quality real estate asset class. Rather than exiting the sector, Blackstone is partially monetizing a successful investment while maintaining broader strategic partnerships with Digital Realty across multiple international developments. Digital Realty, meanwhile, is increasing direct ownership of stabilized, long-duration assets that offer predictable cash flows backed by investment-grade hyperscale tenants.

The valuation also illustrates how the economics of AI data centers continue to evolve. At nearly $7.8 billion for 288 MW of capacity, the implied valuation exceeds $27 million per MW, reflecting the premium investors assign to fully leased AI-ready campuses in Northern Virginia. Long-term leases, strong customer credit quality, and contracted rent escalators make these assets attractive to infrastructure investors seeking stable returns amid accelerating hyperscale AI demand.

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