Blackstone's QTS Lands $1.5B Loan To Refinance Data Center Properties

Blackstone-owned QTS Realty Trust has obtained a $1.5B loan from a consortium of seven major banks to refinance a pair of data centers in Atlanta and Richmond, Virginia, two of the fastest-growing data center markets in the U.S.

Morgan Stanley, Bank of America, JPMorgan Chase, Societe Generale, Goldman Sachs, BNP Paribas and Royal Bank of Canada originated the seven-year, floating-rate loan to QTS, according to a Fitch Ratings report.

The loan is backed by a pair of fully leased, single-tenant data centers on the firm’s campuses in Atlanta and Sandston, Virginia.

The loan will be used to refinance the $1.3B of existing debt on the two data centers, which offer a combined capacity of 138 megawatts across 987K SF. The remaining proceeds will pay estimated closing costs of $22.5M and return $151.5M in equity to Kansas-based QTS. 

QTS didn’t respond to Bisnow’s request for comment.

The banks are working to sell the loan as a commercial mortgage-backed security, and the deal is scheduled to close July 15, the Fitch report says. Midland Loan Services is slated to be the servicer for the CMBS trust.

Each of the data center properties backing the loan is fully leased to a separate tenant. While the identities of those tenants haven't been disclosed — a common practice in the data center industry — the Fitch report identifies the lessees as investment-grade, suggesting they are likely two of the Big Tech hyperscalers that have dominated data center leasing.

The 93 MW Georgia property, which sits on 13 acres in QTS’ 99-acre, 278 MW campus 3.6 miles northwest of downtown Atlanta, was purpose-built in 2023 for a tenant described by Fitch as a “content and digital media” firm.

That tenant’s occupancy is through a single lease with a remaining term of 5.2 years, although a pair of extension options could push the remaining term to 11.2 years. The property's rent of $71.40 per kilowatt per month is nearly 38% below market rate, according to Fitch. 

In Virginia, the 45 MW data center tied to the deal sits 14 miles east of Richmond in the suburb of Sandston. Similar to the Georgia property, the 34.4-acre site is within a larger campus totaling 100 acres and 240 MW operated by QTS. Originally built as a semiconductor manufacturing plant in 1996, the property was redeveloped and retrofitted for its current tenant in 2024. 

That tenant, a cloud services provider, is inked to a single lease with a remaining term of 14.5 years. A 184-month tenant extension option, if exercised, would bring the total remaining lease term to 29.8 years. 

Atlanta and Richmond have emerged as two of the fastest-growing hotbeds for hyperscale data center development. 

By far the larger of the two markets, Atlanta now trails only Northern Virginia in total data center inventory, with 1,279 MW of capacity, according to CBRE. Barely considered a primary data center market just five years ago, Atlanta overtook Northern Virginia as the No. 1 market for data center absorption in 2024, marking the first time that Northern Virginia has lost its top position.

That robust demand is expected to continue. According to CBRE, 62.6% of the 2,159 MW being developed in Atlanta has been preleased.

While Richmond isn't considered a top-tier data center market, the region has seen exponential data center growth in recent years. Located just 100 miles south of the world’s densest concentration of data centers in “Data Center Alley” and close to a critical landing station for trans-Atlantic cables, the market has seen an influx of large-scale projects from hyperscalers and third-party data center providers.

In addition to QTS, Amazon Web Services, Meta and Microsoft have all established footholds in the Richmond area, with Amazon investing more than $11B to build three new campuses in nearby Louisa County. Amazon has also pitched a 1,143-acre campus in Caroline County.

Earlier this month, developer EdgeCore Digital Infrastructure announced plans for a $17B, 1.1 GW campus in Louisa County, while officials in Chesterfield County approved rezoning for a pair of campuses totaling more than 1,300 acres. Other projects include Tract’s proposed 1,211-acre project in Hanover County, while QTS has announced a 1.5M SF expansion and acquired more than 1,200 acres for future development in Henrico County.

Based in Overland Park, Kansas, QTS is one of the largest third-party data center providers in the world, with a portfolio of more than 3 GW across more than 70 facilities. Blackstone acquired the formerly publicly traded REIT and took it private for around $10B in August 2021. 

In the four years since that deal, QTS expanded more than eightfold, serving as the vanguard of Blackstone’s aggressive push into the data center sector.

The investment giant, which its top executives have called “the largest data center provider in the world,” claims to have a data center portfolio north of $70B with another $100B in assets in its development pipeline. In addition to QTS, Blackstone bought the Asia Pacific region's largest data center provider, AirTrunk, in a $16B deal last year, and it has partnered on development joint ventures with major data center developers like COPT Defense Properties and Digital Realty Trust.