Blackstone Sells Digital Realty
Blackstone Affiliates to Sell 12.3 Million Digital Realty Shares at $185 Each in Public Offering
Blackstone is selling 12,310,249 shares of Digital Realty (NYSE: DLR) at $185 per share, according to GlobeNewswire. The deal is worth roughly $2.28 billion and is expected to close on July 1, 2026.
The shares are not new stock. They come from Blackstone's exit of two Northern Virginia data center joint ventures — Digital Carver Dulles 9 and Brickyard. Digital Realty is buying those properties back from Blackstone, then issuing shares to cover the cost. Morgan Stanley is acting as the sole underwriter, per Stock Titan.
How a 2023 Joint Venture Led to This Exit
This sale traces back to December 2023. At the time, Digital Realty needed cash to build new data centers. Blackstone stepped in with a $7 billion joint venture to develop 10 hyperscale facilities across Frankfurt, Paris, and Northern Virginia. Blackstone took an 80% stake in the deal.
Now, those Northern Virginia buildings are complete and fully leased. Blackstone's strategy — sometimes called "build-to-core" — is to develop an asset, stabilize it, then sell it at peak value. By converting its physical real estate stake into DLR stock and selling that stock publicly, Blackstone walks away with $2.28 billion in cash.
Blackstone Locks In Gains as AI Demand Peaks
The Dulles 9 and Brickyard facilities sit in Loudoun County, Virginia — the most dense data center market in the world. They were built specifically for high-power AI workloads, like training large language models. The buildings are reportedly leased to major hyperscalers.
Blackstone President Jon Gray has called data centers his firm's "highest conviction" investment theme. But the firm is now rotating that capital out of stabilized Virginia assets and into newer markets where land and power are cheaper, such as Malaysia and Northern Italy, according to Financial Content.
Digital Realty Goes From Partner to Full Owner
For Digital Realty, this deal is a strategic win. Before the deal, DLR earned management fees from the joint venture. After closing, DLR collects 100% of the rent from both buildings. That shift should boost the company's Funds From Operations — the key profit metric for real estate investment trusts — over the long term.
CEO Andy Power has described this approach as "re-platforming the balance sheet." The idea is to use outside capital during risky construction phases, then buy assets back once they are de-risked and generating steady income. At $185 per share, Digital Realty's market cap exceeds $60 billion, per GlobeNewswire.
Analysts Split on Dilution Risk for Existing Shareholders
Not everyone is cheering. Adding 12.3 million shares to the public float means existing investors own a slightly smaller piece of the company. Green Street analysts have flagged short-term price pressure as a real risk. On Reddit's r/REITs community, retail investors have expressed frustration about the dilution.
Bulls see it differently. A Goldman Sachs analyst noted that Morgan Stanley pricing 12.3 million shares at $185 — near DLR's all-time high — proves strong institutional demand for AI infrastructure. Yahoo Finance reported the offering closed without issue, suggesting Wall Street absorbed the supply without panic.
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