Blackstone Sells $2.28B of Digital Realty Stock at $185
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
digital-realtyblackstone
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Digital Realty Trust announced the pricing of a $2.28 billion secondary stock offering by funds affiliated with Blackstone on June 30, 2026. The offering priced at $185 per share, a 3.5% discount to the stock's closing price of $191.68 the prior session. The transaction significantly reduces Blackstone's stake in the data center real estate investment trust, a position established through a prior private capital investment.
The sale occurs amid sustained demand for data center infrastructure driven by artificial intelligence and cloud computing expansion. Real estate investment trusts in the sector have traded at elevated valuations, with the Dow Jones Equity All REIT Index rising 14% year-to-date. This environment allows large financial sponsors to monetize investments at favorable multiples.
A comparable transaction occurred in November 2021, when KKR sold $1.5 billion of CyrusOne shares ahead of its acquisition by investment funds. That sale priced at a 2.8% discount to market and represented the largest data center REIT block trade prior to this week's announcement. The current offering's size exceeds that precedent by 52%.
The catalyst for Blackstone's exit is the maturation of its investment thesis. The firm invested $7 billion in Digital Realty in a 2023 joint venture to develop powered-shell data centers. Public market valuations for data center operators have since appreciated approximately 40%, creating an attractive exit window for the private equity giant to recycle capital.
The offering comprised approximately 12.3 million Digital Realty common shares. The $185 pricing represents a 4.2% discount to the stock's 30-day volume-weighted average price of $193.15. Digital Realty's market capitalization stood at $62.3 billion prior to the announcement. The transaction reduces Blackstone's economic exposure by roughly 4% of Digital Realty’s total outstanding shares.
The discount to the previous close is within the typical range for large block trades, which often price between 3% and 5% below the last sale. For comparison, the Vanguard Real Estate ETF is up 8.7% year-to-date, while Digital Realty shares gained 22% over the same period before the offering announcement.
| Metric | Before Offering | After Pricing | Change |
|---|---|---|---|
| Stock Price | $191.68 | $185.00 | -3.5% |
| Blackstone Stake | ~8.5% | ~4.5% | -4.0% |
| Daily Volume (30-day avg) | 1.8M shares | N/A | N/A |
| Offering Volume | 0 shares | 12.3M shares | +12.3M |
Public peers Equinix and American Tower trade at forward price-to-FFO multiples of 21x and 18x, respectively. Digital Realty now trades near 19x forward funds from operations following the price adjustment.
The sale creates immediate technical supply pressure on DLR shares, likely capping near-term performance relative to peers like EQIX. Underwriters typically hedge block trades by shorting the underlying stock, which can depress the share price for several sessions. Institutional investors may view the discounted entry point as an opportunity, supporting the stock above the $180 support level.
Secondary effects benefit competing capital providers. Investment banks involved in the placement earn fees estimated at 1.5% to 2% of the offering value, or roughly $34 million to $46 million. The transaction also signals strong institutional appetite for real asset exposure, potentially lifting other infrastructure-focused REITs such as AMT and CCI.
A key counter-argument is that Blackstone's exit reflects a valuation peak for the data center sector. Private equity firms typically sell at cyclical highs. The sheer size of the offering could indicate limited remaining upside from current levels, a concern for momentum-driven investors.
Positioning data shows hedge funds reduced net long exposure to REITs by 15% in the week preceding the offering. The flow from this trade likely moves into cash or other real asset classes, including commodities and Treasury inflation-protected securities. Long-only real estate funds are the natural buyers of the distributed shares.
Investors will monitor Digital Realty's stock for stabilization above the $185 offering price. A sustained break below $180 would signal weak absorption of the block and could trigger further selling. Key resistance sits at the pre-announcement level near $192.
The next major catalyst is Digital Realty's second-quarter earnings report scheduled for July 24, 2026. Guidance on occupancy rates and development pipelines will determine if fundamentals justify the current valuation. The Federal Open Market Committee's decision on July 29 will influence capital costs for the entire REIT sector.
Market attention shifts to whether other large financial sponsors follow Blackstone's lead. Brookfield Asset Management holds significant stakes in several infrastructure assets, and a similar monetization event could emerge in the coming quarters. Watch for unusual options volume in other data center names as a signal of impending block trades.
A secondary offering involves the sale of existing shares by a major shareholder, like Blackstone, to public market investors. Unlike a primary offering where a company issues new shares to raise capital, a secondary offering transfers ownership without diluting existing shareholders or adding cash to the company's balance sheet. The proceeds go directly to the selling shareholder.
The transaction does not directly affect Digital Realty's operations or financial position. The company receives no proceeds from the sale. However, a large overhang of shares is removed from the market, potentially reducing future selling pressure. The change in shareholder base may influence governance, as large institutional investors typically have different priorities than private equity funds.
Blackstone entered a joint venture with Digital Realty in June 2023, committing $7 billion to develop 10 data center campuses across North America and Europe. The partnership focused on building powered-shell facilities, which provide critical infrastructure for hyperscale cloud providers. This week's sale represents a partial monetization of the financial returns generated from that venture.
Blackstone's $2.28 billion exit provides a liquidity test for data center valuations amid peak institutional demand.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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