Blackstone sells $2.28B Digital Realty stake at $185/share

Digital Realty Trust priced a $2.28 billion secondary stock offering Tuesday, with Blackstone selling 12.3 million shares at $185 each. The deal, which closes July 1, 2026, trims the private equity firm's stake in the data-center REIT ahead of a planned joint-venture acquisition.

The offering price marked a 2.6% discount to Digital Realty's Monday close of $189.94. Shares fell 3.1% in after-hours trading to $184.10, reflecting the overhang from the block sale.

Blackstone has been reducing its Digital Realty position since 2023, when it first signaled a shift toward direct data-center ownership rather than passive REIT exposure. The firm still holds roughly 8% of Digital Realty's outstanding shares after the sale, according to the prospectus filed with the SEC.

The secondary comes as Digital Realty and Blackstone are finalizing a joint venture to acquire a portfolio of European data centers. The JV structure lets Blackstone retain operational control of the assets while Digital Realty manages the facilities – a model both companies have used in previous deals.

Digital Realty's Alpha Score sits at 55 out of 100, a Moderate rating reflecting the stock's mixed risk-reward profile in the real estate sector. The score weighs the company's 4.2% dividend yield against elevated leverage ratios and slowing leasing demand in some markets.

Underwriters led by Goldman Sachs, Morgan Stanley, and BofA Securities have a 30-day option to buy up to 1.8 million additional shares from Blackstone, which would bring the total deal to $2.62 billion if exercised in full.

Digital Realty shares have fallen 8% year to date, underperforming the broader REIT index, as rising interest rates pressure property valuations and data-center construction costs climb. The stock trades at 18.5 times forward funds from operations, a discount to its five-year average of 22 times.

The offering's pricing at $185 – near the bottom of the marketed range of $185 to $189 – suggests underwriters saw limited demand at higher levels, two people familiar with the deal said. Blackstone's decision to sell rather than hold through the JV close signals the firm is locking in gains from its original investment at roughly $120 per share in 2021.