Wall Street asset managers expand data center bets to secure long-term AI rental income

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Wall Street expands data center AI bets

Highlights

Blue Owl, Ares Management, and Blackstone are acquiring data centers and signing 12-20 year inflation-linked leases with investment-grade customers like Microsoft, Amazon, and Meta.
Ares estimates $5 trillion in AI-related capex demand through 2030, including $2 trillion for data center assets, stimulating a shift toward leveraged finance and private credit.
Shares of alternative asset managers rose sharply Thursday, with Blue Owl up 6.5%, Ares up 2%, KKR and Blackstone each up 2.5%, Apollo Global up 3.7%.

Data center ownership strategy gains momentum

As reported by Reuters, firms including Blue Owl, Ares Management and Blackstone are emphasizing ownership of physical digital infrastructure as a way to capture steady income from the AI boom. Their approach centers on leasing capacity to large, financially strong customers under long-term contracts that include annual rent increases or inflation-linked escalators.

Blue Owl Co-CEO Marc Lipschultz said the company owns infrastructure that is critical to the digital economy and typically leases it for 15 to 20 years, creating predictable rental income for investors. CFO Alan Kirshenbaum said Blue Owl has more than 130 data centers operating or under construction, representing nearly 14 gigawatts of leased and owned capacity, with another 21 gigawatts in its pipeline.

Kirshenbaum said the company is not making a direct bet on AI itself when it invests in data centers, but is instead taking credit risk on tenants such as Microsoft, Amazon and Meta. Ares Management said its development strategy targets metropolitan areas including Tokyo, Osaka, London and Sao Paulo, with projects pre-leased to investment-grade hyperscalers under 12- to 15-year contracts with no termination rights.

Blackstone has also highlighted contracted infrastructure assets, saying the vast majority of its data center portfolio carries initial lease terms of 15 to 20 years. The firm said 96% of counterparties are rated investment grade, with an average market capitalization of $2.5 trillion, which Blackstone President Jonathan Gray said limits perceived risk.

Financing needs widen private credit opportunity

The investment wave tied to AI across data centers, power, equipment and software is becoming one of the largest in history, with Ares estimating more than $5 trillion in AI-related capital expenditure demand through 2030. Of that total, roughly $2 trillion is tied to physical data center buildings and nearby power generation and transmission infrastructure.

Ares CEO Michael Arougheti said investors are becoming more selective about counterparty risk and its pricing after the AI market selloff earlier this month. He also said funding for AI infrastructure is evolving from mainly equity-backed projects to high-grade financing, with more demand now moving into leveraged finance and private credit markets.

That shift is helping broaden the addressable market for private lenders, even as risks remain. Moody's said earlier this week that AI and digital infrastructure are creating large, long-duration financing needs beyond traditional direct lending, while warning that concentration, construction, residual-value and circular-financing risks are increasing.

Public markets are responding positively to the infrastructure-focused thesis for now. Shares of alternative asset managers rose on Thursday, with Blue Owl up 6.5%, Ares Management up 2%, KKR and Blackstone each up 2.5%, and Apollo Global up 3.7%.

In our earlier article on the U.S. AI data center buildout, we highlighted how soaring funding costs, construction delays, and power constraints are challenging developers’ expansion plans. We also noted that only a fraction of proposed projects were viewed as truly credible, with cost overruns and weaker investor sentiment raising doubts about how quickly capacity can scale without undermining returns.

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