Blackstone’s McCarthy-Baldwin ‘Enthusiastic’ on Data Centers

(Bloomberg) -- Blackstone Inc. is enthusiastic on data centers because of an explosion in demand for computing, and it doesn’t see a bubble in the sector, according to Kathleen McCarthy-Baldwin, the alternative asset manager’s global co-head of real estate.

“Data centers are a great place to be positioned” because “you’re not picking like which specific application within artificial intelligence is going to be the winner,” she said Wednesday at Bloomberg’s Women, Money & Power event in London. “You win when you see the digitization of our world playing out, as we are all demanding more information, more compute, more content as well.”

Her comments are in contrast with those of hedge fund manager and Greenlight Capital founder David Einhorn, who cautioned last month that the unprecedented amount of spending on AI infrastructure may destroy vast amounts of capital, even if the technology itself proves transformative.

Real estate investing giants such as Blackstone have been pouring money into the sector as the tech industry titans ranging from OpenAI’s Sam Altman to Meta Platforms Inc.’s Mark Zuckerburg have been talking about spending hundreds of billions of dollars on data centers. 

Injecting an element of caution on the Bloomberg panel discussion, Isabelle Scemama global head of AXA IM Alts, said that the “end game is a little bit unknown.” While agreeing that there is a demand for the facilities, there’s also the risk of having a very limited number of players.

While the speakers agreed on how real estate as an investment asset class has become attractive again with the collapse in construction, growth in cash flow and the return of capital, Scemama said Europe looked more attractive than other regions.

Annette Kroger, Europe chief executive officer of PIMCO Prime Real Estate said that the global themes driving the sector are demographics, digitization, decarbonization, deglobalization and defense. She added that her strategies include logistics, living and data centers, and within that infrastructure type investments that have stable income or net leases. She also said that they “strongly believe in real estate credit.”

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