volume xvii issue 1
Driving home on one of the coldest nights this winter, past the data centers on Waxpool Road, I notice the billowing steam from the HVAC systems, but not from smoke stacks. It strikes me that these are our 21st century factories. Bits – small reference voltages – come in, bits are massaged, bits go on their way back to a user or routed somewhere else.
Amazon has a co-location site in Loudoun County, Virginia. Microsoft is here, Facebook is here, Google is here. Many others. Equinix and Verizon issued a news release in December that EQIX is buying 29 of Verizon’s data centers including NAP (Network Access Point) of the Americas in Miami, NAP of the Capital Region, others in Sao Paulo, Brazil and Bogotá, Columbia.
This was announced as a $3.6B all-cash deal. It is notable this month that EQIX successfully closed €1 billion in new term financing (8-K filing date January 9) to help with the additions – double the original Euro borrowing estimate. Understandably this indicates that EQIX is bullish, using leverage rather than only cash and equity to add these operations to their portfolio properties.
2.4 million gross square feet of rack-available space will be annexed bringing the EQIX point of presence to 17 million gross square feet reaching 43 markets. EQIX believes the acquisition is immediately accretive to AFFO (AFFO, a REIT’s measurement of earnings and capital spend). But $40 million of the deal requires integration costs, which analysts believe pushes a fully-accretive impact 16 - 18 months after closing.
So Verizon divests real estate businesses and will be buying Yahoo! Equinix picks up lucrative NAP sites that fit with their core business. Strategically, great idea for both.
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