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Digital Realty Strengthens Portfolio With $7.8B Data Center Deal
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Key Takeaways
Digital Realty will acquire Blackstone's stake in three Northern Virginia data centers valued at $7.8B.
DLR expects the deal to boost Core FFO per share in 2027 and 2028 as assets stabilize.
The portfolio is fully leased under 15-year agreements with investment-grade hyperscale customers.
Digital Realty (DLR - Free Report) announced that it has agreed to acquire Blackstone-affiliated funds’ equity interest in three hyperscale data centers in Northern Virginia, increasing its ownership of high-quality assets in the world’s largest data center market. The portfolio comprises two facilities in Manassas and one in Sterling, with a combined 288 megawatts of IT capacity. The transaction values the portfolio at $7.8 billion.
Digital Realty will pay Blackstone $3.5 billion for its combined 64% equity interest, including $1.2 billion in cash and $2.3 billion in Digital Realty shares. The company is acquiring Blackstone’s 80% interest in the two Manassas facilities and its 50% stake in the Sterling property. Two of the data centers are expected to stabilize in the first half of 2027, while the third is expected to stabilize in the first half of 2028.
The acquired assets are backed by 15-year leases with customers. All three data centers are fully leased to three separate investment-grade hyperscale customers, carrying a blended average AA- credit rating, and include annual rent escalators of 3.6%. Digital Realty said that the deal will increase its exposure to newly developed capacity in Northern Virginia, a region that continues to attract strong demand from hyperscale cloud providers. The company also noted that it will continue working with Blackstone on other joint ventures in Northern Virginia, Paris and Frankfurt.
Digital Realty’s chief financial officer, Matt Mercier, said the acquisition is expected to be accretive to Core funds from operations (Core FFO) per share in both 2027 and 2028 as development is completed and rental income begins. He added that the transaction is expected to support contractual organic rent growth and improve the quality of Digital Realty’s portfolio through long-term leases with leading hyperscale customers in newly built facilities. According to Mercier, the company’s recent execution and strategic transactions position it to continue its growth trajectory.
Conclusion
Overall, the acquisition strengthens Digital Realty's position in the world's largest hyperscale data center market by increasing its ownership of high-quality, fully leased assets that offer long-term cash flows. As of March 31, 2026, the company has 309 data centers in more than 55 metros, with decent occupancy reflecting the company’s global presence.
While the transaction requires a sizable capital commitment, its expected Core FFO accretion, enhanced exposure to AI- and cloud-driven demand, and stronger portfolio quality reinforce Digital Realty's long-term growth outlook.
In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 17.5% compared with the industry's growth of 13%.
The Zacks Consensus Estimate for LAND’s 2026 FFO per share is pinned at 45 cents. This indicates year-over-year growth of 15.38% for 2026.
The Zacks Consensus Estimate for APLE’s 2026 FFO per share is pegged at $1.58. This implies year-over-year growth of 3.95% for 2026.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
View the Zacks #1 Rank List
Image: Bigstock
Digital Realty Strengthens Portfolio With $7.8B Data Center Deal
Key Takeaways
Digital Realty (DLR - Free Report) announced that it has agreed to acquire Blackstone-affiliated funds’ equity interest in three hyperscale data centers in Northern Virginia, increasing its ownership of high-quality assets in the world’s largest data center market. The portfolio comprises two facilities in Manassas and one in Sterling, with a combined 288 megawatts of IT capacity. The transaction values the portfolio at $7.8 billion.
Digital Realty will pay Blackstone $3.5 billion for its combined 64% equity interest, including $1.2 billion in cash and $2.3 billion in Digital Realty shares. The company is acquiring Blackstone’s 80% interest in the two Manassas facilities and its 50% stake in the Sterling property. Two of the data centers are expected to stabilize in the first half of 2027, while the third is expected to stabilize in the first half of 2028.
The acquired assets are backed by 15-year leases with customers. All three data centers are fully leased to three separate investment-grade hyperscale customers, carrying a blended average AA- credit rating, and include annual rent escalators of 3.6%. Digital Realty said that the deal will increase its exposure to newly developed capacity in Northern Virginia, a region that continues to attract strong demand from hyperscale cloud providers. The company also noted that it will continue working with Blackstone on other joint ventures in Northern Virginia, Paris and Frankfurt.
Digital Realty’s chief financial officer, Matt Mercier, said the acquisition is expected to be accretive to Core funds from operations (Core FFO) per share in both 2027 and 2028 as development is completed and rental income begins. He added that the transaction is expected to support contractual organic rent growth and improve the quality of Digital Realty’s portfolio through long-term leases with leading hyperscale customers in newly built facilities. According to Mercier, the company’s recent execution and strategic transactions position it to continue its growth trajectory.
Conclusion
Overall, the acquisition strengthens Digital Realty's position in the world's largest hyperscale data center market by increasing its ownership of high-quality, fully leased assets that offer long-term cash flows. As of March 31, 2026, the company has 309 data centers in more than 55 metros, with decent occupancy reflecting the company’s global presence.
While the transaction requires a sizable capital commitment, its expected Core FFO accretion, enhanced exposure to AI- and cloud-driven demand, and stronger portfolio quality reinforce Digital Realty's long-term growth outlook.
In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 17.5% compared with the industry's growth of 13%.
Image Source: Zacks Investment Research
Stock to Consider
Some better-ranked stocks from the broader REIT sector are Gladstone Land (LAND - Free Report) and Apple Hospitality REIT (APLE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for LAND’s 2026 FFO per share is pinned at 45 cents. This indicates year-over-year growth of 15.38% for 2026.
The Zacks Consensus Estimate for APLE’s 2026 FFO per share is pegged at $1.58. This implies year-over-year growth of 3.95% for 2026.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.