Introductory Note
Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our company,” “the company” or “Digital Realty” refer to Digital Realty Trust, Inc., together with its consolidated subsidiaries, including Digital Realty Trust, L.P., our “operating partnership.”
Item 8.01. Other Events
On December 7, 2023, Digital Realty and Blackstone Inc, and affiliated funds (together, “Blackstone”) entered into an agreement to establish a joint venture to develop four hyperscale data center campuses located in each of Frankfurt, Germany, Paris, France and Northern Virginia. Under the terms of the agreement, Blackstone is expected to make initial capital contributions of approximately $700 million in the aggregate to acquire an 80% ownership interest in the joint venture. Digital Realty will contribute the properties to the joint venture, maintain a 20% interest in the joint venture and will manage the development of the campuses and day-to-day operations of the joint venture, for which it will receive customary fees.
The four hyperscale data center campuses have a total estimated development cost of approximately $7 billion over the course of the next several years. The campuses are expected to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. Of this capacity, 46 megawatts are currently under construction and 33% pre-leased. The remaining land capacity is in varying phases of pre-construction and is expected to be developed to meet customer demand. Approximately 20% of the total potential IT load capacity is expected to be delivered through 2025, with the balance expected to be delivered in 2026 and beyond.
The joint venture is expected to close in two stages over the course of the first half of 2024. The closing of the joint venture is subject to certain regulatory and other approvals, as well as other customary closing conditions. Subsequent to Blackstone’s initial capital contributions, the two joint venture parties will fund their pro rata share of the remaining development costs for each campus. Digital Realty and Blackstone have also agreed that Digital Realty will grant Blackstone a right of first offer to make a similar investment in the development of additional data center capacity in Northern Virginia, as well as certain rights over potential future development projects in the Paris and Frankfurt regions.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are predictive in nature, that depend on or relate to future events or conditions, or that include words such as “believes”, “anticipates”, “expects”, “may”, “will”, “would”, “should”, “estimates”, “could”, “intends”, “plans” or other similar expressions are forward-looking statements. Forward-looking statements involve significant known and unknown risks and uncertainties that may cause the company’s actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors: timing of the closing of the joint venture; the development timing and cost of the campuses; potential IT load capacity; the satisfaction of customary closing conditions; and other risk factors relating to the industries in which we operate, as detailed from time to time in each of our reports filed with the Securities and Exchange Commission. There can be no assurance that the proposed transactions will be consummated on the terms described herein or at all.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. We discussed a number of additional material risks in our Annual Report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise.