Equinix (EQIX) Closes $800M Infomart Dallas Acquisition

Equinix, Inc. (NASDAQ:EQIX) recently completed the acquisition of the Infomart Dallas from ASB Real Estate Investments in an $800-million cash-debt transaction. This move is in sync with the company’s effort to expand in the region. Further, it offers scope to capitalize on the solid growth potential of the Latin America market in terms of Interconnection Bandwidth.

The buyout seems a strategic fit for Equinix. Specifically, the acquisition has enhanced the company’s portfolio with around 1.6 million gross square feet of space. It includes multiple diverse fiber entry points. Also, the company gained from the addition of more than 50 tenants, including networks, colocation providers and office tenants.

Around $50 million of revenues were generated by the Infomart building in 2017. One year from closing, Equinix estimates this transaction to be adjusted funds from operations (AFFO) per share breakeven. In addition, future development of the adjacent acquired land parcel offers significant AFFO upside potential.

In fact, Equinix’s global platform gets a boost with the acquisition of Infomart, which is one of the largest inter-connection hubs in the United States. It currently houses four of eight Equinix Dallas International Business Exchange data centers.

Moreover, the Dallas market has been experiencing sizable growth with solid demand stemming from a rising number of enterprises across different verticals setting their regional or national headquarters in the region.

Furthermore, according to the company, Dallas serves as a key interconnection point for LATAM traffic, with routes serving Central and South America. Therefore, with LATAM predicted to be the fastest growing region in terms of Interconnection Bandwidth through 2020, per the Equinix published 2017 Interconnection Index Report, this Infomart facility acquisition in Dallas, and its operative units in Miami, Los Angeles, Bogotá, Sao Paulo, and Rio de Janeiro will likely help the company leverage on the growth potential of the Latin America market.

Notably, acquisitions have been a major growth driver for Equinix and helped it expand its data-center capacity in many of the company’s key markets since 2003. Last year, the company bought various assets, including the Itconic and Zenium businesses, and data-center assets from IO UK and ICT-Center AG. Furthermore, in 2017 the company completed the acquisition of 29 data centers and their operations from Verizon Communications Inc. (NYSE:VZ) , for a total cash consideration of $3.6 billion. All these acquisitions are expected to make decent contributions toward the company’s total revenue growth.

Equinix carries a Zacks Rank #3 (Hold). In the past month, the stock has gained 5.2% and outperformed its industry which incurred loss of 1.5%.



Stocks Worth a Look

Two better-ranked stocks from the REIT industry are Arbor Realty Trust (NYSE:ABR) and Extra Space Storage Inc. (NYSE:EXR) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share has been revised 2.3% upward to 90 cents over the past two months. Its share price has risen 3.8% in six months’ time.

Extra Space Storage’s FFO per share estimates for the current year moved up 2% to $4.59 in a month’s time. Its shares have gained 7.4% over the past six months.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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Equinix, Inc. (EQIX): Free Stock Analysis Report

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