Equinix Buys LA Data Center, Plans More Deals

Internet exchange service provider Equinix, Inc. has acquired a 107,000 square foot data center in the Los Angeles market, and is unveiling plans for additional expansion and data center purchases.

The center, located in El Segundo, will become Equinix's third IBX center in the Los Angeles area, and follows expansions announced by Equinix earlier this year in the Silicon Valley and Chicago markets. The new center will be acquired through a purchase, where Equinix will own the land, the building and the data center assets. It will provide Equinix with additional data center space to respond to strong customer demand in the Los Angeles market, particularly among the large aggregation of rapidly growing digital media companies in the region.

Originally built for Exodus Communications in 2001 at a cost of approximately $80 million, the 107,000 square foot stand-alone center was purchased for $34.5 million. Equinix conducted a rigorous review of all data center properties on the market in the Los Angeles area and identified this property to be the only center available to meet Equinix's high standards. The center, with its advanced power infrastructure, will add approximately 2,000 cabinets and will double Equinix's Los Angeles area footprint to more than 200,000 square feet. Equinix intends to open the new center for customers in the first half of 2006.

The center will be interconnected to Equinix's downtown Los Angeles IBX centers through redundant dark fiber links managed by Equinix. This interconnection fabric will enable occupants in each center to have direct access to each other as if they were in the same location, and it will provide immediate access to the more than 85 networks currently operating within Equinix's L.A. IBX.

Equinix also announced today that the company is considering future expansion plans to lease, buy or build data center properties in large metropolitan markets. Chief Financial Officer Renée Lanam will manage Equinix's expansion efforts under the new title of Chief Development Officer. Keith Taylor, currently VP of Finance and Chief Accounting Officer, will be named CFO of Equinix.

"With three data center acquisitions since the beginning of 2005, Equinix is responding to the strong customer growth that is solidifying our leadership position in the colocation and exchange services market and paving the way to meeting our goal of building a $500 million dollar company," said Peter Van Camp, CEO of Equinix. "As our expansion plans are critical to the growth of the company, Equinix has committed a seasoned veteran of the Equinix senior management team, Renée Lanam, to oversee these efforts. I have the utmost confidence in Renée's leadership in this new role, and I am excited that Keith Taylor, who also has a depth of knowledge and financial experience from a long tenure at Equinix, will serve as the company's CFO."

"As customer demand drives new expansions, the current market environment gives us a significant amount of flexibility to lease, purchase or build attractive data center properties," said Lanam. "We plan to explore new builds through build-out partnerships or other financing strategies to reduce the outlay of cash and maximize shareholder returns."

Equinix intends to invest approximately $15 million of capital expenditures to upgrade the center to Equinix standards, of which $2.0 to $3.0 million is expected to be incurred in 2005, increasing 2005 expansion capex guidance to a range of $25.0 to $30.0 million and total capex to a range of $42.0 to $48.0 million.

Equinix said it will explore sale-leaseback opportunities before year-end to minimize the cash outlay related to the purchase of the El Segundo center.

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  By Rich Miller September 23, 2005 | Permalink | >Get Posts By E-mail

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