Key Takeaways
- • Blue Owl reports more than 130 data centers operating or under construction, representing nearly 14 gigawatts of leased and owned capacity, with another 21 gigawatts in its pipeline.
- • Blackstone says the vast majority of its data center portfolio has initial lease terms of 15 to 20 years, with 96% of counterparties rated investment grade.
- • Ares estimates AI-related capex demand at just over $5 trillion through 2030, including roughly $2 trillion for data center buildings and adjacent power infrastructure.
- • Moody's warns that concentration, construction, residual-value and circular-financing risks are growing even as many borrowers remain investment grade.
- • Alternative asset manager shares rose on Thursday, with Blue Owl up 6.5% and Ares gaining 2%, while KKR and Blackstone each rose 2.5% and Apollo gained 3.7%.
Summary
Wall Street's largest alternative asset managers are positioning themselves on the AI boom by owning physical data center infrastructure and locking in rental income through long-term leases, according to a Reuters report dated October 29. The strategy is being presented as a hedge against concerns that heavily indebted neocloud companies, which sit at the core of AI infrastructure buildout, could default, and that massive spending on the sector may not generate adequate returns.
Blue Owl Co-CEO Marc Lipschultz said the firm leases its infrastructure for 15 to 20 years with annual rent escalators, creating what he described as a predictable and growing income stream for investors. He said Blue Owl seeks to limit risks tied to short-term leases and token pricing. Blue Owl CFO Alan Kirshenbaum said the firm does not expect demand for computing power to decline, adding that the company is "taking Microsoft, Amazon, Meta, credit risk." Blue Owl has more than 130 data centers operating or under construction, representing nearly 14 gigawatts of leased and owned capacity, with another 21 gigawatts in its pipeline.
Ares Management said its data center development strategy targets metropolitan areas including Tokyo, Osaka, London and Sao Paulo, pre-leasing projects to investment-grade hyperscalers under 12- to 15-year leases with no termination rights and inflation escalators. Blackstone, in comments on its post-earnings call, said the vast majority of its data center portfolio has initial lease terms of 15 to 20 years, with 96% of counterparties rated investment grade and an average market capitalization of $2.5 trillion. Blackstone President Jonathan Gray told analysts, "So when we think about risk, that doesn't feel particularly risky to us."
Ares estimates AI-related capex demand at just over $5 trillion through 2030, including roughly $2 trillion for physical data center buildings and adjacent power generation and transmission. Ares CEO Michael Arougheti said investors are becoming more discerning about counterparty risk and how to price it, and downplayed the impact of higher borrowing costs on AI capex financing, noting the alternative would be equity funding. He said funding demand is moving from equity to high-grade debt and now into leveraged finance and private credit markets.
Moody's said AI and digital infrastructure are creating large, long-duration financing needs that broaden the private credit market beyond traditional direct lending. The agency cautioned that "many borrowers and counterparties are investment grade. However, concentration, construction, residual-value and circular-financing risks are growing." Shares of alternative asset managers rose Thursday, with Blue Owl up 6.5%, Ares gaining 2%, KKR and Blackstone each up 2.5%, and Apollo Global up 3.7%.
Blue Owl Co-CEO Marc Lipschultz said the firm leases its infrastructure for 15 to 20 years with annual rent escalators, creating what he described as a predictable and growing income stream for investors. He said Blue Owl seeks to limit risks tied to short-term leases and token pricing. Blue Owl CFO Alan Kirshenbaum said the firm does not expect demand for computing power to decline, adding that the company is "taking Microsoft, Amazon, Meta, credit risk." Blue Owl has more than 130 data centers operating or under construction, representing nearly 14 gigawatts of leased and owned capacity, with another 21 gigawatts in its pipeline.
Ares Management said its data center development strategy targets metropolitan areas including Tokyo, Osaka, London and Sao Paulo, pre-leasing projects to investment-grade hyperscalers under 12- to 15-year leases with no termination rights and inflation escalators. Blackstone, in comments on its post-earnings call, said the vast majority of its data center portfolio has initial lease terms of 15 to 20 years, with 96% of counterparties rated investment grade and an average market capitalization of $2.5 trillion. Blackstone President Jonathan Gray told analysts, "So when we think about risk, that doesn't feel particularly risky to us."
Ares estimates AI-related capex demand at just over $5 trillion through 2030, including roughly $2 trillion for physical data center buildings and adjacent power generation and transmission. Ares CEO Michael Arougheti said investors are becoming more discerning about counterparty risk and how to price it, and downplayed the impact of higher borrowing costs on AI capex financing, noting the alternative would be equity funding. He said funding demand is moving from equity to high-grade debt and now into leveraged finance and private credit markets.
Moody's said AI and digital infrastructure are creating large, long-duration financing needs that broaden the private credit market beyond traditional direct lending. The agency cautioned that "many borrowers and counterparties are investment grade. However, concentration, construction, residual-value and circular-financing risks are growing." Shares of alternative asset managers rose Thursday, with Blue Owl up 6.5%, Ares gaining 2%, KKR and Blackstone each up 2.5%, and Apollo Global up 3.7%.
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