Meta and BlackRock establish a $14 billion partnership to create an AI data center in El Paso.

      Meta has integrated its partially completed El Paso data center into a joint venture with BlackRock, establishing a framework that allows most of the $14 billion project to remain off its balance sheet.

      According to the agreement, BlackRock-managed funds will own 80% of the Texas facility, while Meta will retain the remaining 20%. However, Meta will act as the construction manager, property manager, and sole tenant once the servers become operational in 2028.

      The total development cost is estimated at approximately $14 billion, and the distribution of this amount is a key aspect of the deal. BlackRock will contribute about $4.9 billion in cash at financial close, while Meta will transfer the land and ongoing construction, valued at around $2.3 billion, and receive a one-time $1 billion distribution to ensure equitable ownership.

      The remaining $12.5 billion will be financed through debt linked to the project rather than to Meta itself, allowing the company to classify its use of the facility as rent rather than capital expenditure. This distinction is particularly significant this year, given Meta's projection of $125 billion to $145 billion in capital expenses for 2026, a range it increased in April, and its need to demonstrate that the investments in AI will ultimately be profitable.

      The financing process has been in the works for several weeks. BlackRock secured the borrowing for the campus earlier this month, after Meta had already put together a financing package that briefly set a new benchmark for single-site AI funding. The debt figure increased from the earlier estimated amount of $12 billion to $13 billion to the finalized $12.5 billion included in the venture.

      BlackRock is orchestrating the deal through Global Infrastructure Partners and HPS Investment Partners, two divisions it has focused on data center assets since acquiring Aligned Data Centers for $40 billion. The firm is now involved in both initiating the infrastructure and selling the debt that finances it, with the El Paso project closely following this strategy.

      For Meta, this approach is familiar. In rural Louisiana, it kept most of its $200 billion Hyperion campus off its balance sheet by granting 80% to an external investor and leasing the site back, and the El Paso arrangement mirrors this model almost precisely.

      The initial lease is set for four years with four options for extension, potentially lengthening the agreement to two decades. Meta has also indicated plans to invest about $600 billion in U.S. infrastructure through 2028, although this figure is more of a commitment than a set budget.

      However, this financing strategy is not without its risks, as the debt for these campuses is typically long-term while the servers inside can depreciate within a few years, and the lease term may be shorter than the lifespan of the hardware it accommodates.

      The campus is intended to provide a gigawatt of computing power for Meta's AI systems and its primary advertising operations, with operations expected to commence in 2028, making it one of the largest single-site facilities the company is setting up outside of Louisiana.

      BlackRock reports that around 2,300 individuals are currently employed at the site, with construction projected to peak at over 4,000 jobs and about 300 permanent positions expected to remain once operations begin. Additionally, the company has committed to training around 12,000 electricians over three years through its Future Builders program, addressing the current labor shortage affecting large data center projects.

      Mark Zuckerberg described the joint venture as a means to expedite progress, stating that the partnership with BlackRock will help them "move faster and at greater scale," linking it to Meta's stated goal of establishing infrastructure for what he refers to as superintelligence.

      Larry Fink, BlackRock's CEO, positioned the deal as evidence of the growing capabilities of his firm, highlighting "the strength and scale of our combined capabilities with GIP and HPS." Neither addressed the crucial underlying issue of what occurs if the processing power Meta is acquiring does not prove profitable by 2028.