Latham & Watkins Advises Digital Realty in US$7 Billion Hyperscale Data Center Development Joint Venture With Blackstone
Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, and Blackstone Inc. (NYSE: BX) has announced that Blackstone-affiliated funds led by Infrastructure, Real Estate, and Tactical Opportunities have agreed to establish joint ventures with Digital Realty to develop four hyperscale data center campuses across three metro areas on two continents. The developments are expected to support approximately 500 megawatts (MW) of total IT load upon full build out of all campuses. Blackstone will acquire an 80% ownership interest in each joint venture for approximately US$700 million of initial capital contributions, while Digital Realty will maintain a 20% interest. Subsequent to closing, the joint venture parties will fund their pro rata share of the remaining development costs. Digital Realty will manage the development and day-to-day operations of each joint venture, for which it will receive customary fees.
The four hyperscale data center campuses are located in Frankfurt, Paris, and Northern Virginia and have a total estimated development cost of approximately US$7 billion over the course of the next several years. The campuses are planned to support the construction of 10 data centers with approximately 500 MW of potential IT load capacity. Of this capacity, 46 MW is under construction and is 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.
Latham & Watkins LLP is representing Digital Realty in the transaction with a corporate team led by Los Angeles/New York partner Julian Kleindorfer and San Diego partner Ann Buckingham, with associates Madeleine West and Ryan Kazemaini. Advice was also provided on real estate and general transaction matters by Chicago partner Robert Buday, Orange County partner Hilary Strong and Chicago counsel Dustin Paige, with associates Kimberly Legate Ford, Euna Park, and David Stepovich; on tax matters by Century City partner Ana O’Brien and Los Angeles partner Eric Cho, with associate Eric Song; on German corporate/real estate matters by Frankfurt partners Otto von Gruben and Torsten Volkholz, with associates Sebastian von Hornung and Henriette Hosemann; on German tax matters by Hamburg partner Tobias Klass; on French corporate matters by Paris partner Charles-Antoine Guelluy, with associates Ines Schapira and Alexandre de Puysegur; on French tax matters by Paris partner Xavier Renard, with associate Jean-Baptiste Bourbier; and on antitrust/regulatory matters by San Diego/Bay Area partner Hanno Kaiser, Brussels partner Luca Crocco, Hamburg counsel Jana Dammann De Chapto, and Brussels counsel Tomas Nilsson, with associates Giuseppe Liotine and Markus Welzenbach.