Digital Realty Buys Stakes in Three NoVa Data Centers

Digital Realty is doubling down on the world’s hottest data center market, striking a multibillion-dollar deal to secure greater ownership of a fully leased Northern Virginia portfolio.

The publicly traded real estate investment trust agreed to acquire Blackstone’s majority stake in three data centers in Manassas and Sterling at a gross asset value of $7.8 billion, the companies announced Monday. The transaction values the portfolio at an initial stabilized capitalization rate above 6.5 percent and will increase Digital Realty’s ownership in assets it has been developing alongside Blackstone since the firms formed a joint venture in 2023.

Digital Realty will pay $3.5 billion to Blackstone for its blended 64 percent equity interest, split between $1.2 billion in cash and $2.3 billion in company stock. The deal is expected to close shortly, subject to customary conditions.

The portfolio includes two 96-megawatt facilities in Manassas and one 96-megawatt building on Digital Realty’s Digital Dulles campus in Sterling, totaling 288 megawatts of capacity. All three properties are fully leased to separate investment-grade hyperscale customers under 15-year leases with annual rent escalations of 3.6 percent.

While the properties remain under development, Digital Realty expects two of the facilities to stabilize in the first half of next year and the third in the first half of 2028. The company said the acquisition is expected to boost core funds from operations per share in both years as tenants begin paying rent and the developments reach stabilization.

The transaction also deepens an existing partnership rather than ending it. Blackstone and Digital Realty will continue working together on other joint venture developments in Northern Virginia as well as projects in Paris and Frankfurt, according to the companies.

The deal underscores how institutional investors continue pouring capital into digital infrastructure, one of commercial real estate’s strongest-performing sectors. Demand from cloud providers and AI companies has fueled an unprecedented buildout of hyperscale campuses, particularly in Northern Virginia, where power availability has become one of the industry’s most valuable commodities.

A few months ago, an affiliate of Starwood Capital Group purchased approximately 42 acres in Chantilly, Virginia, from Fairfax County for $166.8 million for a potential data center development. The deal is contingent on Starwood receiving land use approvals to construct the facility, which the county expects to generate $20 million in tax revenue.

Backlash has followed suit.

Earlier this spring, Brookfield affiliate Compass Datacenters abandoned its 800-acre project in Prince William County, Virginia, following a legal challenge that invalidated zoning approvals.