Investment firm Blackstone Group recently announced a deal to buy QTS Realty Trust for $6.7 billion and take the data center operator private, The Wall Street Journal reports. The transaction is valued at approximately $10 billion when the assumption of QTS’s existing debt is included.
“We are delighted to back QTS and its world-class management team as they continue to scale the company to meet the rising demand for data centers,” Blackstone Infrastructure Partners Senior Managing Director Greg Blank said in a statement. “QTS aligns with one of Blackstone’s highest conviction themes – data proliferation – and the required investment makes it well suited as a long-term holding for our perpetual capital vehicles. We are committed to a strong, lasting partnership, leveraging Blackstone’s scale, reach, resources and access to capital to drive long-term growth at QTS.”
QTS, a real estate investment trust (REIT), owns more than 7 million square feet of data center space throughout North America and Europe. The company’s customers include big software and social media companies along with government organizations that use QTS’s centers to securely store and process data.
“QTS is powered by its people and continues to set a new standard for service delivery in the data center industry,” QTS Chairman and CEO Chad Williams said in a statement. “We see a significant market opportunity for growth as hyperscale customers and enterprises continue to leverage our world-class infrastructure to support their digital transformation initiatives. We are confident this transaction is the right step to achieve our strategic objectives in our next phase of growth. I want to thank each of our QTS employees for their continued dedication to a culture of service to others, which has positioned QTS to enter into this transformative transaction.”
Blackstone looks for Growth
Blackstone’s investment approach has included putting more money into fast-growing areas of the economy, The Wall Street Journal reports. The firm recent investment has included technology companies and warehouses used in e-commerce. Purchasing QTS puts Blackstone in another popular sector—data. Blackstone will look to own the QTS platform for longer than the standard private equity investment and continue to expand its reach, according to people familiar with the deal.
Blackstone recognizes its infrastructure business and BREIT, its non-traded investment trust, as “perpetual” capital, according to The Wall Street Journal. This means Blackstone Group can hold onto assets indefinitely and does not have to return capital to investors by any particular deadline, which would be the case in a standard private equity or real estate fund.
“We are focused on investing in assets that are benefitting from strong, secular tailwinds, such as the rapid digitalization of data,” Tyler Henritze, Head of Acquisitions Americas for Blackstone Real Estate said in a statement. “QTS is a leading provider of data center solutions with a portfolio of high-quality assets in desirable markets, positioning it well to capitalize on these powerful trends in the data center space. We believe the vast expertise across our business will enable the QTS platform to succeed over the long-term.”
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