Redwood City-based data center owner Equinix Inc. has made a major strategic acquisition in Dallas, Texas, buying the iconic Infomart Dallas in an $800 million debt and cash deal.
The acquisition is slated to close by mid-2018 and includes $31 million in cash, combined with $750 million in senior unsecured loans with various maturity dates. Upon their expiration, the loans are expected to hold a value of $769 million.
The much-anticipated acquisition from ASB Real Estate Investments includes the Infomart’s operations and tenant leases.
"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 Equinix President of the Americas Karl Strohmeyer in a prepared statement.
"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," he added.
The 1.6 million-square-foot facility at 1950 N. Stemmons Freeway in Dallas includes multiple diverse fiber entry points and significantly expands potential opportunities for Equinix, which currently has 11 megawatts of power through existing underdeveloped capacity in the Infomart. Equinix also has the ability to develop another 40 megawatts of power on a development tract of land adjacent to the Infomart.
In all, the Infomart has about 45 tenants, which include office tenants, co-location providers and networks. Equinix is the largest tenant of the Infomart, and accounts for about 40 percent of the lease revenues of the data center.
Last year, the Infomart building generated about $50 million in revenue, of which about $20 million was tied to rent and maintenance from Equinix.
The California-based company’s leadership group expects the deal to buy the Infomart to break even per share one year after it closes.
This acquisition further strengthens Equinix’s global platform by increasing recurring revenue from owned real estate to more than 45 percent, and gives the data center company the ability to further expand in Dallas, which is one of the largest enterprise and co-location data center markets in the Americas.
Within the data center company’s eight data centers, Equinix houses more than 100 network service providers, more than any other data center provider in North Texas.
Citi, J.P. Morgan and Davis Polk & Wardwell LLP advised Equinix in the deal. ASB Real Estate Investments owns Infomart Data Centers on behalf of its Allegiance Real Estate Fund-affiliated entity, a $7.4 billion funding vehicle that invests in institutional-quality real estate.
The Infomart acquisition, which is subject to customary closing conditions, could close by the end of this summer.
Equinix’s longtime CEO, Steve Smith, resigned last month after exercising "poor judgement" with an employee.
Data Center Operators
Ranked by Sq. ft. of data center space in Bay Area as of March/April 2017
Rank Business name Sq. ft. of data center space in Bay Area as of March/April 2017 1 Digital Realty Trust Inc. 3.47 million 2 CoreSite Realty Corp. 779,000 3 Equinix Inc. 414,000 View This List