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Blackstone Aims To Cash In On AI With $8B Data Center Push

Blackstone is preparing to pump billions into subsidiary QTS Data Centers to fund new development as the firm looks to capitalize on Big Tech’s escalating artificial intelligence arms race

A rendering of a planned QTS data center in Prince William County, Virginia.

The asset management giant plans to spend $8B through QTS to build new data centers, the Financial Times reports. Much of this investment will come from the firm’s $68B Blackstone Real Estate Income Trust, even as the nontraded REIT sells off assets in other sectors to pay investors seeking to withdraw their money. 

The development push represents a big bet on AI driving a wave of demand for data centers capable of handling the massive computing needs of technologies like ChatGPT.  

“Large technology companies are in the midst of an AI arms race which we believe will be a once-in-a-generation engine for future growth in data centers and is driving tremendous demand on the ground,” BREIT told investors, according to the Financial Times. 

QTS has already dramatically expanded its footprint since it was acquired by BREIT and two other Blackstone funds for $10B in 2021. The firm has tripled its leased space since the acquisition, with its valuation doubling to around $20B, according to the Financial Times. 

The FT also reported that QTS has already spent $1B buying land for data centers in five U.S. states. Most recently, this includes 400 acres in South Carolina acquired by QTS for $11M, the Charlotte Business Journal reported last week. QTS plans to double its existing capacity, according to the Financial Times, with development costs for each new facility estimated at around $1B. 

In March, QTS unveiled updated plans to build 16 data center buildings across an 850-acre site in the booming submarket of Prince William County, Virginia.  

The cash infusion for QTS comes as BREIT unloads assets in other sectors, an effort to increase liquidity following a wave of withdrawal requests from investors beginning late last year that put the fund at risk of what it termed a “liquidity mismatch.” 

BREIT, which the Financial Times reports has $10B in immediate liquidity, has limited redemptions since then, and it has sold off $10B in assets across a range of sectors. These disposals include a deal inked earlier this month to sell Simply Self Storage to Public Storage for $2.2B, as well as the $800M sale of a Texas resort. BREIT also began taking offers on an 815K SF Atlanta office tower in early June.