Digital Realty Buys Out Blackstone in $3.5B Northern Virginia Hyperscale Deal
How a $3.5B buyout consolidates 288 MW of hyperscale capacity while turning a joint venture into wholly owned infrastructure.
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Digital Realty Trust agreed to purchase Blackstone’s blended 64% equity interest in three fully leased hyperscale data centers in Northern Virginia for $3.5 billion in net equity consideration.
interests sat inside two joint ventures, the Digital Carver Dulles 9 and Digital Carver Brickyard vehicles, backed by Blackstone’s Real Estate, Infrastructure, and Tactical Opportunities funds.
The proceeds gave Digital Realty full ownership of 288 MW of critical IT capacity across three facilities.
The transaction was announced on June 29, 2026, and closed on June 30, 2026.
Portfolio And Asset Detail
The portfolio comprises three 96 MW facilities.
Digital Realty acquired Blackstone’s 80% interest in two 96 MW data centers in Manassas, Virginia, and its 50% interest in one 96 MW data center on the Digital Dulles campus in Sterling, Virginia.
On close, both joint ventures became wholly owned subsidiaries of Digital Realty’s operating partnership.
The gross valuation of $7.8 billion on a 100% basis includes assumed debt and the remaining capital expenditure required to reach full stabilization.
Lease Terms And Tenant Credit
The three data centers are 100% leased to three distinct investment-grade hyperscale tenants on 15-year contracts.
The leases carry a blended average tenant credit rating of Aa3/AA- and a 3.6% annual rental escalator weighted by contractual rent.
The transaction implies an initial stabilized capitalization rate above 6.5%, calculated on estimated first-year stabilized net operating income.
Two facilities are expected to reach full stabilization in the first half of 2027 and the third in the first half of 2028.
Consideration And Capital Sourcing
The $3.5 billion consideration was split into a $1.2 billion cash component and a $2.3 billion stock component.
Digital Realty funded the cash portion through its at-the-market equity program, selling 6,158,839 shares between April 29 and June 29, 2026, to raise approximately $1.2 billion.
The stock component was paid by issuing 12,310,249 shares of newly designated non-voting common stock, struck at the June 29 closing price of $190.58.
The non-voting shares convert automatically into voting common stock on transfer to unaffiliated buyers.
Secondary Offering And Close
Blackstone’s affiliates opted to monetize the stock immediately.
On June 29, Blackstone entered an underwriting agreement with Morgan Stanley as sole underwriter for a registered secondary offering of the full 12,310,249-share block.
The offering priced after the close on June 30 at $185.00 per share, a 2.9% discount to the pre-announcement price, raising approximately $2.277 billion in gross proceeds for Blackstone.
Digital Realty received no proceeds from the secondary.
The company projects the acquisition to be leverage-neutral and accretive to Core Funds From Operations per share in 2027 and 2028 as the final construction phases complete.
Great read! What stood out to me is that Digital Realty isn't just buying more capacity, it's taking greater control of fully leased hyperscale assets in one of the world's most important data center markets. It feels like a long-term strategic move rather than just another acquisition. Thanks for breaking it down so clearly.