Equinix Buys Infomart Dallas Building for $800M

Equinix has acquired the Infomart Dallas, the iconic carrier hotel that serves as the primary interconnection hub for networks in the Southern US.

The Redwood City, California-based colocation and interconnection giant said Wednesday it will pay $800 million in cash and debt to the building’s owner, ASB Real Estate Investments, a division of ASB Capital Management. ASB is the owner of Infomart Data Centers, the wholesale data center provider that's been operating the building.

“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,” Karl Strohmeyer, Equinix president for the Americas, said in a statement.

A report that Infomart Data Centers was exploring a sale of some or all of its assets surfaced in December. The company also has data center assets in San Jose, California; Hillsboro, Oregon (leased to LinkedIn); and Sterling, Virginia. On an earnings call Wednesday, Equinix executives said they had evaluated Infomart's other assets but found the Dallas facility to be the most valuable part of the portfolio.

The amount of network carriers present in the building make it a highly strategic asset for a company like Equinix, whose business revolves around providing companies access to networks they need to link their systems to.

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The company also gets room to expand capacity in one of the country’s most important and fastest-growing markets. The 1.6 million-square foot building has enough “underdeveloped capacity” to add about 11MW of power, according to Equinix. Adjacent land on the property has room to accommodate another 40MW, the company said.

Finally, as a real estate investment trust, Equinix has to own a substantial portion of the footprint it uses to provide its services. Acquiring the building, where it already operates four data centers as a tenant, ticks the REIT box.

The Infomart Dallas building

This is Equinix’s first acquisition of 2018, which follows an especially active year for the company in terms of M&A. Last year, the company announced acquisitions of the Australian data center provider Metronode, a Zenium data center in Istanbul, the Spanish provider Itconic. It also closed the blockbuster $3.6 billion acquisition of the Verizon data center portfolio, which was announced in late 2016.

The Verizon deal included another major southern interconnection hub: NAP of the Americas. The Miami carrier hotel is the primary interconnection point for most networks in Latin America and serves as the main network gateway between the US and Latin America.

Related:Here are the 5 Biggest Data Center Acquisitions of 2017

On Wednesday, Equinix also reported full-year business results for 2017. Its total revenue for the year was $4.4 billion, up 21 percent from 2016. Net 2017 income was $233 million. The company said it expects to reach $5 billion in revenue this year.

This is Equinix’s first earnings report since the abrupt resignation of its former CEO and board member Steve Smith. He left the company in January “after exercising poor judgment with respect to an employee matter,” according to the company’s official statement.

The Infomart building has about 45 tenants, including networks, office tenants, and colocation providers like Equinix.

The building’s tenants generated about $50 million in revenue last year, Equinix said. The Redwood City giant was responsible for $20 million of that revenue, including rent and “maintenance recoveries.”

Equinix expects to close the transaction by mid-2018.