Key Takeaways
- • Digital Realty acquired Blackstone's 64% equity stake in a three-facility Northern Virginia data center portfolio for $3.5 billion ($1.2 billion cash, $2.3 billion stock), valuing the entire portfolio at $7.8 billion gross asset value.
- • The portfolio comprises 288 megawatts of fully leased capacity across two 96-megawatt facilities in Manassas and one 96-megawatt building in Sterling, all committed to investment-grade hyperscale customers under 15-year leases with 3.6% annual rent escalations.
- • Digital Realty expects the acquisition to be accretive to core funds from operations per share in 2027 and 2028 as the stabilizing assets commence tenant rent payments, with two facilities stabilizing in H1 2027 and the third in H1 2028.
- • The deal represents a partial exit for Blackstone from a 2023 joint venture while deepening the partnership, with both firms continuing development collaborations in Northern Virginia, Paris, and Frankfurt.
- • The transaction capitalizes on Northern Virginia's position as the world's most competitive data center market, driven by hyperscale computing demand and proximity to major technology infrastructure hubs.
Summary
Digital Realty, a publicly traded REIT, has agreed to acquire Blackstone's majority stake in a three-facility Northern Virginia data center portfolio for $3.5 billion, according to an announcement by the companies on Monday, June 30, 2026. The transaction values the entire portfolio at a gross asset value of $7.8 billion and represents a consolidation of ownership in assets the two firms have jointly developed since establishing their partnership in 2023. Digital Realty will fund the acquisition through $1.2 billion in cash and $2.3 billion in company stock, with closing expected shortly subject to customary conditions.
The portfolio comprises three fully operational data centers totaling 288 megawatts of capacity: two 96-megawatt facilities located in Manassas and one 96-megawatt facility on Digital Realty's Digital Dulles campus in Sterling. All three properties are 100% leased to separate investment-grade hyperscale customers under long-term 15-year lease agreements featuring annual rent escalations of 3.6 percent. The portfolio's stabilized capitalization rate stands above 6.5 percent, reflecting strong underlying economics in Northern Virginia's hyperscale-focused market.
While construction and development activities continue, Digital Realty has provided a phased stabilization timeline: two of the three facilities are expected to reach stabilization in the first half of 2027, with the third following in the first half of 2028. As each property reaches operational stabilization and tenants begin occupancy and rent payments, Digital Realty anticipates the acquisition will generate accretive contributions to core funds from operations per share in both 2027 and 2028.
Notably, this transaction does not represent a complete dissolution of the Blackstone-Digital Realty partnership. The two firms have committed to continuing their joint venture development collaboration across multiple markets, including additional projects in Northern Virginia as well as data center developments in Paris and Frankfurt. This structure suggests Blackstone retains strategic optionality in select international and domestic markets while reducing its equity exposure in the proven Northern Virginia portfolio.
The portfolio comprises three fully operational data centers totaling 288 megawatts of capacity: two 96-megawatt facilities located in Manassas and one 96-megawatt facility on Digital Realty's Digital Dulles campus in Sterling. All three properties are 100% leased to separate investment-grade hyperscale customers under long-term 15-year lease agreements featuring annual rent escalations of 3.6 percent. The portfolio's stabilized capitalization rate stands above 6.5 percent, reflecting strong underlying economics in Northern Virginia's hyperscale-focused market.
While construction and development activities continue, Digital Realty has provided a phased stabilization timeline: two of the three facilities are expected to reach stabilization in the first half of 2027, with the third following in the first half of 2028. As each property reaches operational stabilization and tenants begin occupancy and rent payments, Digital Realty anticipates the acquisition will generate accretive contributions to core funds from operations per share in both 2027 and 2028.
Notably, this transaction does not represent a complete dissolution of the Blackstone-Digital Realty partnership. The two firms have committed to continuing their joint venture development collaboration across multiple markets, including additional projects in Northern Virginia as well as data center developments in Paris and Frankfurt. This structure suggests Blackstone retains strategic optionality in select international and domestic markets while reducing its equity exposure in the proven Northern Virginia portfolio.
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