"Real estate benchmark" Blackstone has shifted its focus! Selling houses to invest in AI data centers

"Real estate benchmark" Blackstone actively embraces the AI wave, with its flagship real estate fund selling assets on a large scale to raise liquidity and investing billions of dollars in data center construction.

According to the Financial Times on Sunday, in recent months, Blackstone has been raising cash in preparation for what it sees as a "once-in-a-lifetime" opportunity to build data centers to meet the growing demand for computing power brought about by the booming development of artificial intelligence.

Since last autumn, Blackstone's real estate trust fund, Breit, has sold over $10 billion worth of assets to improve liquidity. The sale price of these assets is 4% higher than their value on Breit's balance sheet, bringing Blackstone an investment return of approximately $2.5 billion.

"This $10 billion in liquidity provides a significant financial advantage for Blackstone's AI data center construction," according to sources cited by the Financial Times:

"Blackstone has committed over $8 billion to build new data centers for several large technology companies. In recent years, Blackstone has spent over $1 billion to purchase land and construct new data centers in five states in the United States. To meet the enormous energy demands of the planned data centers, they have also signed power contracts with local utility companies."

It is worth mentioning that Blackstone is very optimistic about the development prospects of data centers. Blackstone investment strategist Joe Zidle pointed out in an article on the official website:

"Generative AI models rely on powerful data processing capabilities and extensive storage capacity, which should drive the demand for physical data centers capable of handling the intensive computing requirements of generative AI applications."

Zidle compares the construction of data centers to the early development of e-commerce:

"We are at the beginning of integrating AI into enterprises and the broader economy. Currently, there are more questions than answers, and all we can do is identify the indispensable parts of AI implementation and growth trajectory. More data means the need for more storage. In some ways, AI reminds me of the early days of e-commerce. It is clear that Amazon fundamentally disrupted the retail industry, prompting investors to seek infrastructure that would contribute to its success. Warehouses became an indispensable part of Amazon's rise. To fulfill its promise, Amazon needs last-mile delivery, which requires a large amount of warehouse capacity near population centers."

Last year, Blackstone spent $6.7 billion to acquire data center provider QTS. Since the acquisition, their leased area has doubled, and now Blackstone is preparing to further expand its scale through new investments. Currently, QTS is valued at approximately $20 billion, more than double its value at the time of Blackstone's acquisition.

Senior officials at Blackstone believe that this investment could become one of their most profitable real estate investments. Large technology companies are engaged in an AI arms race, and data centers will be the engine of future growth, driving tremendous demand.