QTS Raises $1.65B in Data Center Debt

Data center projects are increasingly being tied to billion-dollar financing packages, demonstrating the capital needed for the facilities.

QTS Realty, the data center arm of Blackstone, raised $1.65 billion in financing through the sale of high-grade bonds, Bloomberg reported. The financing should help in the development of data centers across the country.

The maturities of the bonds range from five to ten years. Both QTS and Blackstone declined to comment further to the publication.

In 2021, Blackstone Real Estate Income Trust jumped into the AI arms race, partnering with Blackstone’s infrastructure fund to acquire QTS Realty Trust for $10 billion. The valuation of QTS doubled within two years of the acquisition; the organization has more than 75 properties either online or under development.

Last month, CoStar reported that QTS was approaching a deal with Morgan Stanley for a $1.5 billion refinancing tied to two data center properties.

That’s a drop in the bucket compared to what Meta’s been up to in Louisiana. Mark Zuckerberg’s company recently tapped Pimco and Blue Owl Capital to lead a $29 billion financing package for a massive data center project.

Data centers will account for an estimated 20 percent of the country’s energy consumption by the end of the decade, up from 2.5 percent in 2022, according to industry experts.

McKinsey & Company recently estimated that data centers will need $6.7 trillion to meet global computing power demand by 2030.

With artificial intelligence reshaping the market for data center facilities, demand for land that can be used to house data centers is exploding. That can be a benefit for local landowners with land to sell, as well as municipal tax revenues.

However, people are often reluctant to live near data centers due to aesthetic and environmental concerns, which prompts opposition and lawsuits from residents. Energy companies are also increasingly drained by data centers, forcing them to hike rates and further stress the electric grid.

— Holden Walter-Warner