Digital Realty (NYSE: DLR) to acquire $3.5B Blackstone hyperscale data centers
Rhea-AI Filing Summary
Digital Realty is expanding its data center footprint through a series of large transactions. The company agreed to buy Blackstone’s blended 64% interests in three Northern Virginia hyperscale data centers at a gross value of $7.8 billion, paying $1.231 billion in cash and additional non-voting common stock valued at $2.346 billion. These fully leased facilities total 288 megawatts of IT capacity under 15-year leases with 3.6% annual rent escalators and are expected to be accretive to Core FFO per share in 2027 and 2028.
The company also bought approximately 1,440 acres near Kansas City for development for $377.6 million plus 517,475 operating partnership units and agreed to issue 3,425,031 shares to increase its Teraco joint venture stake to 77%. In parallel, Digital Realty raised about $1.2 billion of equity via the sale of 6,158,839 common shares under its at-the-market program, primarily to repay revolving credit borrowings and fund growth and general corporate purposes.
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Insights
Large hyperscale expansion, equity-funded and projected FFO accretion.
Digital Realty is deepening its presence in Northern Virginia by acquiring Blackstone’s 64% stakes in three hyperscale data centers, at a gross value of $7.8 billion and an estimated initial stabilized capitalization rate over 6.5%. The assets are fully leased to investment-grade hyperscale customers with 15-year terms and 3.6% annual rent escalators.
Management expects the Blackstone acquisition to be leverage neutral and accretive to Core FFO per share in 2027 and 2028, once developments are completed and rents fully commence. Additional growth comes from a $377.6 million Kansas City land purchase and a move to raise its Teraco stake to 77%, enhancing global scale.
These expansions are funded largely with equity, including 6,158,839 shares sold for about $1.2 billion under the at-the-market program and shares issued to Blackstone and Teraco partners. While this introduces dilution, the long-duration leases, contracted rent escalators, utility power agreements and targeted FFO accretion suggest a strategy focused on stable, utility-like cash flows from hyperscale customers, subject to execution and development risks highlighted in the risk disclosures.
8-K Event Classification
Key Figures
Key Terms
Core FFO financial
initial stabilized capitalization rate financial
at the market equity program financial
non-voting common stock financial
resale registration rights regulatory
hyperscale data centers technical
FAQ
What is Digital Realty (DLR) buying from Blackstone in Northern Virginia?
How much is Digital Realty paying Blackstone and in what form?
How will the Blackstone acquisition affect Digital Realty’s Core FFO?
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AI-generated analysis. How Rhea-AI works. Not financial advice.