Blackstone Buys Australian Data-Center Operator for $16.1 Billion

Data centers are the physical real estate that house the Internet. Often resembling big box warehouses, they contain the servers that store information uploaded to the cloud and process data on the web, whether that is photos, emails, movies or software. The growth in AI, illustrated by the rapid take-up of services such as OpenAI’s ChatGPT, has made data centers extremely valuable to own.

Already developers are scrambling to build more data centers and lease capacity to tech giants. But some commercial real-estate owners worry the market has become too hot, and consider data centers to be unattractive when assessed against the valuations of other industrial property. There’s also a risk that companies decide to store data privately rather than use public data centers, weighing on future demand.

Blackstone wants to become a leader in owning and developing infrastructure that can support AI. It expects about $2 trillion will be spent in building new data centers worldwide in the next five years, half of it outside the U.S. Blackstone invested $33.7 billion in the June quarter, much of which was focused on computing infrastructure.

“This is Blackstone at its best: leveraging our global platform to capitalize on our highest conviction theme,” Jon Gray, Blackstone’s president and chief operating officer, said of the AirTrunk deal.

Recent deals included a $7.5 billion debt financing provided by Blackstone and other firms in May to CoreWeave, an AI-focused cloud services provider and data-center operator. Blackstone’s $4.5 billion contribution made it the firm’s largest-ever debt-financing package, Blackstone co-founder and Chief Executive Stephen Schwarzman said in July.

Separately, QTS Data Centers has expanded its lease capacity seven times since Blackstone took it private roughly three years ago.

AirTrunk was founded in 2015 and opened its first so-called hyperscale data centers in Australia two years later. Backed by investors including Australia-listed asset manager Macquarie Group, AirTrunk owns enough land to more than double the 800 megawatts of capacity currently committed to customers.

“This transaction evidences the strength of the AirTrunk platform in a strong performing sector as we capture the next wave of growth from cloud services and AI, and support the energy transition in Asia-Pacific,” said Robin Khuda, AirTrunk’s founder and chief executive.

Write to Stuart Condie at stuart.condie@wsj.com