Digital Realty has agreed to purchase a larger ownership interest in three Northern Virginia data centers from Blackstone in a USD 3.5 billion cash-and-stock transaction, the companies announced on Monday, with the deal expected to close on Tuesday.

Deal Structure and Financial Terms

Under the terms of the agreement, Digital Realty will pay Blackstone's funds USD 1.2 billion in cash and USD 2.3 billion in Digital Realty shares.

The total asset value of the three data centers, including debt and planned capital expenditures, is placed at USD 7.8 billion according to the two companies.

The transaction involves Digital Realty acquiring Blackstone's 80% interest in two 96-megawatt data centers located in Manassas, Virginia, as well as a 50% interest in a separate 96-megawatt facility in Sterling, Virginia.

Each of the three properties operates at the hyperscale level, and all three are described by Digital Realty as fully leased.

Accretion and Stabilization Timeline

Digital Realty Chief Financial Officer Matt Mercier said the transaction is expected to be accretive to Core FFO per share in both 2027 and 2028, as development work is completed and rents commence across the portfolio.

The companies indicated that two of the three facilities are expected to stabilize in the first half of 2027, with the third stabilization anticipated in the first half of 2028.

Strategic Rationale in the World's Largest Data Center Market

Northern Virginia is widely recognized as the world's largest data center market, and the acquisition is intended to deepen Digital Realty's foothold in that region.

Demand for data center capacity in the area has surged as cloud computing and artificial intelligence workloads drive greater infrastructure requirements from enterprise and hyperscale customers alike. Greg Wright, Chief Investment Officer of Digital Realty, framed the transaction as the natural progression of an existing partnership with Blackstone.

"We have developed a strong partnership with Blackstone through the successful ongoing development of these assets, and we continue to work together across the remaining data center investments in our joint ventures in Northern Virginia, Paris, and Frankfurt," Wright said.

"This transaction reflects the next phase of that relationship, allowing us to increase our ownership in a portfolio of fully leased, high-quality hyperscale assets."

Ongoing Joint Venture Relationship

The deal does not mark the end of the two firms' collaboration. According to Wright's statement, Digital Realty and Blackstone retain shared investments in joint ventures spanning additional data center assets in Northern Virginia as well as properties in Paris and Frankfurt.

The acquisition of the Blackstone interest in the three Virginia facilities is therefore positioned as one component of a broader and continuing investment relationship between the asset manager and the data center operator, rather than a full exit by either party from their joint activities.