AI infrastructure investors turn to long leases and creditworthy tenants

Major alternative asset managers are emphasizing the buildings and contracts behind the AI expansion. Reuters reported October 29 that Blue Owl, Ares and Blackstone are pursuing long leases and financially strong tenants as concerns grow about the sector’s borrowing and investment returns.

Blue Owl described typical leases of 15 to 20 years with annual rent increases. Ares pointed to pre-leased developments for investment-grade hyperscalers, while Blackstone said 96% of counterparties in its data center portfolio were investment grade, according to Reuters. These are the managers’ descriptions of their portfolios and strategies, not guarantees of future performance.

Different assets, different underwriting

Blue Owl’s own strategy materials distinguish three businesses: net-leased property, real estate credit and digital infrastructure. The digital infrastructure strategy covers buying, financing, developing and operating data centers and related assets. Its net-lease strategy focuses on long-term occupancy by investment-grade or creditworthy tenants.

The firm describes an investment process that assesses both tenant credit and the underlying real estate, negotiates lease terms, and monitors property obligations after investment. Blue Owl released its third-quarter results on October 29, providing the corporate reporting context for the discussion.

Contracts do not eliminate delivery risk

Infraday perspective: A long lease can make expected revenue easier to assess, but a building still has to be completed and supplied with reliable power and cooling. Developers and financing partners need to distinguish the credit behind a lease from the construction, operating and refinancing assumptions supporting the asset.

For readers researching the manager, see Infraday’s Blue Owl Capital profile. It describes published capabilities; it does not confirm financing availability for an individual project.