Digital Realty Drops 5% After $3.5B Blackstone Data Center Deal

Digital Realty has agreed to acquire a $3.5 billion stake in three Virginia data centers from Blackstone, sending its shares down 5.4% in premarket trading on Tuesday.

Digital Realty pays $1.2 billion cash and issues $2.3 billion in shares. The transaction values the fully leased facilities at $7.8 billion and is scheduled to close Tuesday. Digital Realty will take an 80% interest in two 96-megawatt data centers in Manassas and a 50% interest in one 96-megawatt center in Sterling, according to multiple reports including Bloomberg and Reuters.

The deal marks the next phase of the companies' existing partnership. It increases Digital Realty's ownership in high-quality hyperscale assets in Northern Virginia, the world's largest data center market.

The facilities are expected to stabilize on different timelines. The first two data centers are projected to stabilize in the first half of 2027. The third is slated to stabilize in the first half of 2028.

Greg Wright highlights growth runway and private capital platform. Digital Realty's chief investment officer said the purchase extends the company's runway for growth and adds to its pipeline of product for its strategic private capital platform. The assets are fully leased, he noted in the company's Monday statement.

Virginia maintains its lead despite competition from Texas. A February report from real estate firm JLL found Texas was close to overtaking Virginia. Still, 92% of North American data center capacity currently under construction is pre-committed, signaling low vacancy through at least 2030. Hyperscalers including Amazon, Microsoft, Meta and Google have committed close to $700 billion in capex this year for AI infrastructure.

Digital Realty shares are up 23% year-to-date despite Tuesday's premarket decline. The move deepens the Austin-based company's exposure to the AI-driven data center boom centered in Virginia.