Equinix, which was recently listed as the top data centre operator in the world by Cloudscene’s latest leaderboard rankings, will benefit greatly from the acquisition of the 1.6 million gross sq ft landmark facility. The highly interconnected hub will further strengthen Equinix’s global platform.
The Dallas metro represents one of the largest enterprise and colocation markets in the Americas and the eight Equinix IBX data centres house more than 100 network service providers—more than any other data centre provider in the Dallas metro area.
“As Dallas becomes an increasingly strategic North American interconnection hub for businesses making the shift to digital, the acquisition of the Infomart will enable existing and new customers to scale their operations with Equinix,” said Karl Strohmeyer, Americas president at Equinix.
“This includes a rich portfolio of interconnection options, including on-demand connections to partners and infrastructure in any Equinix location globally through the new capabilities of Equinix Cloud Exchange Fabric.”
ECX Fabric is an on-demand platform that enables Equinix customers to discover and dynamically connect to any other customer across any Equinix location globally. ECX Fabric offers access to more than 1,000 of the world’s largest enterprises, cloud service providers (including Alibaba Cloud, Amazon Web Services, Google Cloud Platform, IBM Cloud, Microsoft Azure and Oracle Cloud) and SaaS providers (including Salesforce, SAP and ServiceNow, among others). By reaching their entire digital ecosystem through a single private and secure connection, companies can rapidly scale their digital business operations globally. Customers can also locate their data close to the edge of their network, increasing performance by keeping data near consumption points.
Interconnection is becoming an essential building block of the digital economy and interconnection bandwidth is expected to grow at a 45% CAGR to reach 5,000Tbps by 2020, according to the Global Interconnection Index, dwarfing global IP traffic in both growth (24%) and volume (855Tbps).
As a result of this transaction, Equinix will increase the number of its owned assets by four, increasing recurring revenue from owned assets to more than 45%. The acquisition will also secure the ability to further expand in the Dallas market with future development, and is expected to expand the important role Equinix plays in helping companies evolve from traditional businesses to digital businesses by globally interconnecting with the people, locations, cloud services and data that are critical to their operations.
Infomart is one of the largest interconnection hubs in the US and is currently home to four of eight Equinix Dallas International Business Exchange (IBX) data centres (DA1, DA2, DA3 and DA6), which combined, support approximately 3,500 built out cabinets.
The facility provides significant expansion opportunities to Equinix through the existing underdeveloped capacity (approximately 11MW of power), as well as the potential to develop additional capacity (approximately 40MW of power) on land adjacent to the Infomart building.
It currently has approximately 45 tenants, including networks, colocation providers, office tenants and Equinix. Today, Equinix is the largest tenant accounting for approximately 40% of the lease revenues from the facilities.
The Infomart building generated approximately $50 million of revenues in 2017, of which approximately $20 million was attributed to rent and maintenance recoveries from Equinix. Equinix expects this transaction to be AFFO per share breakeven one year from closing. Additionally, there is sizable AFFO upside from the future development of the acquired land parcel that is adjacent to the Infomart Dallas building.
Some of the 2017 Infomart Data Centers developments at the Dallas facility, included: In November 2017, Hurricane Electric established a new PoP in Infomart’s Dallas Building Meet-Me Room (BMMR). The move will see Hurricane Electric provide increased bandwidth and global network connectivity options for customers in Infomart Dallas, said Mike Leber, president of Hurricane Electric at the time. The US wholesale data centre provider also announced in August that it was doubling the capacity of its carrier-neutral building meet-me room (BMMR) in Dallas. Infomart Data Centers launched its channel partner programme in September, which was immediately available at its Dallas facility. DE-CIX Dallas’s data centre-neutral internet exchange also became operational at Infomart’s Dallas building.
At the end of 2017, Equinix announced a deal worth more than A$1 billion (US$792million) to acquire Australian data centre firm Metronode, which is expected to close in the first half of 2018, subject to regulatory approval. The acquisition will expand Equinix’s global footprint by adding 10 data centres and more than 8,000 sq ft across Australia, bringing Equinix’s total number of International Business Exchange centres in Australia to 15 facilities overall. In other news, Steve Smith recently resigned suddenly as CEO of Equinix for what is described as “exercising poor judgment with respect to an employee matter”.
The financial terms of the deal include cash consideration of $31 million combined with $750 million in senior unsecured notes issued to ASB at various maturities over 36 months after the closing date. The notes will be valued at approximately $769 million when adjusted to reflect the current trading value of Equinix currently outstanding bonds. The transaction is expected to close by mid-2018, subject to the satisfaction of customary closing conditions. As part of the deal, approximately 50 Infomart employees and contractors, primarily in the operations functions of the acquired facility, will become Equinix employees or contractors.