Blackstone Launches Public Data Center Firm
Blackstone is spinning off a new publicly traded data center company to capitalize on the AI boom. The private equity giant is courting sovereign wealth funds as anchor investors and plans to use the proceeds for aggressive M&A. The move comes as its real estate fund, BREIT, posted net inflows for the first time since 2022.
The new public company will be built around QTS Realty Trust, a data center operator Blackstone took private in a $10 billion all-cash deal in 2021. That acquisition was a take-private of a publicly-traded REIT, giving Blackstone control of QTS's significant data center footprint across North America and Europe. Since the acquisition, Blackstone has aggressively expanded QTS's development pipeline, with the company's potential for new data center development ascending to an estimated $92 billion. Since 2021, QTS has increased its leased capacity fourteenfold and has multiple gigawatts of power capacity in its portfolio. Massive new projects are underway, including a planned $10 billion campus in Iowa and $780 million in new facilities and expansions in Texas. The immense energy requirement of AI is the primary catalyst for this move, with global data center electricity consumption projected to more than double by 2030. Training a large language model like GPT-4 is estimated to consume over 50 gigawatt-hours of electricity. This insatiable demand for power and cooling has made data centers a high-conviction investment theme for major players. Sovereign wealth funds (SWFs) are key players in this space, viewing digital infrastructure as a core asset class similar to traditional utilities. SWFs from the UAE, Saudi Arabia, and Singapore have already deployed billions into data center platforms. Using SWFs as anchor investors helps de-risk the public offering and provides stable, long-term capital for future acquisitions. This transaction creates a publicly-traded "acquisition currency" for Blackstone to consolidate a fragmented market. Competitors in the data center space include publicly-traded REITs like Equinix and Digital Realty, alongside hyperscalers like Amazon Web Services and Microsoft who build and operate their own facilities. From a valuation perspective, data center REITs are currently trading at a premium to most other real estate sectors. In early 2026, the data center REIT sector averaged a Price-to-FFO (Funds from Operations) multiple of 23.8x, among the highest in the REIT market. Blackstone's new public company will likely be benchmarked against these multiples.
