Equinix said Tuesday that it plans to sell 16 data centers across the country for $65 million. The sites Equinix intends to keep or sell can be seen as the company’s “what’s hot and what’s not” list for the market.
Specifically, Equinix said it intends to sell 16 sites housing its International Business Exchange (IBX) data centers to an investment group consisting of 365 Main, Crosslink Capital and Housatonic Partners. The investment group will manage the data centers; a statement released Monday seems to indicate that they will be a long-term investment rather than a short-term opportunity. The deal will close during the fourth quarter.
Equinix executives explained that they are exiting nine markets entirely, apparently because of a lack of demand. It also plans on closing data centers in regions where other facilities already offer sufficient capacity. Equinix’s choices should give data center operators a chance to reassess their own investment plans, and whether the markets from which Equinix is withdrawing represent an opportunity.
The sites Equinix plans to exit entirely include: Buffalo, Cleveland, Detroit, Indianapolis, Nashville, Phoenix, Pittsburgh, St. Louis and Tampa.
The remaining seven data centers, located in regions where Equinix will maintain a presence include Chicago; Reston, Vir.; Dallas; New York City; Philadelphia; Seattle; and San Jose. (Specifically, the sites are: CH6 at 427 La Salle, Chicago; DC9, at 11513-19 Sunset Hills Road, Reston, Vir; DA5, 4101 Bryan St., Dallas; NY10, at 65 Broadway, New York; PH2, at 3701 Market St., Philadelphia; SE1, at 1914 Third Ave., Seattle; and SV7, at 534 Stockton Ave., San Jose.)
“As we sharpen our focus on developing business ecosystems, we are prioritizing the largest global markets required by our targeted customers and applications that are driving growth across Platform Equinix,” Charles Meyers, president of the Americas for Equinix, wrote in a statement. “We believe the divestiture of these assets will allow
us to focus our capital and energy on our most productive data centers and will ensure that customers at these sites will be supported by an experienced data center operator that will continue to invest in these locations. We are excited to partner with 365 Main to make this transaction a success.”
In July, Equinix announced it was looking overseas to expand its business, focusing on “network density” in key markets such Amsterdam and Miami. The company isn’t hurting for cash; Equinix pulled in $36 million in profits, up 19 percent versus last year, and revenue grew 3 percent to $466.3 million.
Equinix told analysts that its two most important projects within the United States are building out its data centers in New York City and Boca Raton; the latter is near several major fiber-optic cable landing stations in the lowest latency route to Brazil. Equinix’s NY4 site assists Wall Street with its data center needs—but the company presumably feels that the New York City market is oversaturated, given how its NY10 data center, located at 65 Broadway St., is on the list of sites Equinix plans to sell.