Digital Realty is set to acquire Blackstone's share in three data centers located in Virginia.

      Northern Virginia is essentially the physical home of the internet, and a significant portion of it has recently exchanged ownership. Digital Realty has reached an agreement to acquire Blackstone’s majority interest in three fully leased data centers in the area, a deal that values these assets at $7.8 billion.

      Such figures have become commonplace in a sector where the demand for AI has transformed server warehouses into highly sought-after real estate in the country. The specifics of the transaction reveal that Digital Realty is investing $3.5 billion for the blended 64% equity interest held by Blackstone-managed funds in this portfolio, which consists of $1.2 billion in cash and $2.3 billion in Digital Realty shares.

      The choice to pay two-thirds of the equity in shares rather than cash indicates insights into both capital costs and Blackstone’s readiness to remain invested in the potential upside through the buyer rather than the properties themselves.

      The portfolio itself is appealing. It includes two data centers situated in Manassas and one on the Digital Dulles campus in Sterling, each boasting 96 megawatts of IT capacity and fully leased to three distinct investment-grade hyperscale customers. In a landscape where the limited resource is not floor space but power, the 288 megawatts of contracted capacity with reputable tenants epitomizes an ideal data-center asset.

      The deal anticipates an initial stabilized capitalization rate exceeding 6.5%, a yield figure that informs institutional buyers about their investment return. The acquisition is projected to finalize on June 30, contingent on standard closing conditions, making this more of a near-complete transaction than a proposal.

      For Digital Realty, a publicly traded real estate investment trust and one of the leading data-center operators globally, the rationale is clear: acquire stabilized, leased capacity in the foremost data-center market in the United States without the lengthy risks of permitting, construction, and power procurement associated with a new build. Purchasing already operational megawatts is the quickest pathway to growth at a time when power represents a bottleneck for the industry.

      Loudoun and Prince William counties in Northern Virginia manage a significant share of global internet traffic, and grid constraints have compelled some operators to wait years before activating new capacity. This makes a fully powered, completely leased portfolio rarer and more valuable than the headline figure might indicate.

      For Blackstone, the sale represents a partial withdrawal from a position it has successfully managed. The firm has been an aggressive player in private capital for digital infrastructure, and realizing a profit on valuable Virginia assets while converting part of the proceeds into Digital Realty stock is a typical strategy for them, allowing them to secure their gains without completely exiting the deal.

      Keeping a minority stake alongside an experienced operator also enables Blackstone to remain connected to the leasing dynamics they understand well, without taking on the operational responsibilities of managing the sites themselves.

      This transaction is part of a larger influx of capital transforming AI’s physical infrastructure, where the limitations have shifted noticeably from chips to the facilities and power necessary for housing them. The investment rationale behind these deals mirrors that of the chip industry, where firms such as SiFive view data-center silicon as a market exceeding $100 billion fueled by autonomous AI. Concrete, power, and cooling represent the same investment in the realm of real estate.

      This investment trend continues to attract capital. Goldman Sachs and Nomura credit a significant portion of China’s recent export growth to AI-related goods, including semiconductors and data-center components that support global infrastructure expansions, a demand signal that connects directly to deals like this one.

      As the purchase approaches closure, focus now shifts to where the next batch of contracted megawatts will originate and how much buyers are prepared to invest to secure it before others do.