American data centre solutions provider Digital Realty has formed a partnership with investment major Blackstone to build hyperscale data centres.

Under the alliance, Digital Realty and Blackstone-affiliated funds led by Infrastructure, Real Estate, and Tactical Opportunities will form a JV.

The JV will develop four hyperscale data centre campuses in Frankfurt, Paris and Northern Virginia.

With an estimated development cost of $7bn over the next few years, the campuses will support the construction of ten data centre facilities.

The data centres are expected to have a combined IT load capacity of approximately 500MW.

By 2025, about 20% of the total potential load capacity will be brought online, the remaining is expected to be available in 2026 and beyond.

For roughly $700m in initial capital investments, Blackstone will have an 80% ownership stake in the JV, with Digital Realty holding a 20% stake.

Digital Realty will oversee the JV’s development and day-to-day operations.

Blackstone president & COO Jon Gray said: “Data centres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution.

“Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted data centre operator in Digital Realty is another example of how we are investing behind this trend.”

Digital Realty president and CEO Andy Power said: “By partnering with Blackstone, the world’s largest alternative asset manager, Digital Realty is better able to deliver capacity to meet the burgeoning demand of our hyperscale customers, by accessing a deep pool of likeminded private capital.

“Digital Realty is focused on executing on the sizable opportunity that lies ahead and this partnership helps to accelerate the monetisation of nearly 20% of our industry-leading land bank.”

Subject to various governmental and other approvals, as well as closing conditions, the JV is planned to close in two parts during the first half of 2024.