Equinix Lines Up Expansion Financing
The rising cost of data center development has made project financing a critical issue for companies expanding their networks. Equinix announced today that it has arranged financiang for its ambitious expansion, which includes huge new projects in Chicago, Washington and New York. In a sign of the times, Equinix also announced that it has dramatically increased the power and cooling requirements for its new Chicago center.
The first phase of build outs for the three previously-announced expansions will increase the company’s cabinet capacity by approximately 20 percent, increasing its global footprint to 37,000 cabinets. To fund the buildout, Equinix has received loan commitments for $150 million, $110 million of which will fund the Chicago expansion IBX data center, with the remainder dedicated to Washington, D.C. area project.
“The financing agreements announced today provide Equinix with attractive financing terms for maximum flexibility in managing our expansion plans without dilution to our shareholders,” said Peter Van Camp, CEO of Equinix. “These three new centers complete our current efforts to secure long-term expansion platforms for contiguous growth in our key markets. The first phase of build outs, available in 2007, will accommodate the robust customer demand we continue to experience and solidify our position as the leading provider of collocation and network exchange services.”
Equinix plans to spend a whopping $165 million to build out the first phase of the Chicago center, of which $70 million is expected to be incurred in 2006. This includes approximately $50 million to purchase the land, construct a specially built 250,000 square foot shell, acquire access to power, and provision fiber for interconnection to Equinix’s downtown IBX center locations. The first phase is expected to have approximately 2,500 cabinets, and is scheduled to open in the third quarter of 2007.
But there was one change, and it may be significant for Equinix’ competitors and other companies planning new data centers. “Equinix intends to develop the new Chicago site in multiple phases with over twice the power and cooling specifications of its original design,” the company said today. That suggests that Equinix is seeing its clients’ heat and power loads continue to rise – or at least that those clients are seeking enhanced specs on the new sites to have headroom on a “just in case” basis.
The Chicago loan is expected to carry an interest rate of 8 percent on the initial three-year term, with an option to extend the term of the loan for an additional two years. The company expects to close the loan in the fourth quarter of 2006.
Equinix said it intends to increase the existing mortgage on its Washington, D.C. area campus from $60 million to $100 million to fund construction, with terms remaining unchanged at a fixed rate of 8% and a 20-year term. The Washington, D.C. area campus is located in the Dulles Corridor and is home to many of the region’s technology companies. Equinix is building out an existing shell on the campus and intends to open the new center for customers in early 2007.
Equinix said it also intends a multi-phase buildout for its new 340,000 square foot New York center, located near its existing IBX center in Secaucus, N.J. The first phase will accommodate approximately 1,700 cabinets, and open for customers in the third quarter of 2007. Equinix will invest $75 to $85 million to build out the first phase of the center, of which $5 million is expected to be incurred in 2006. If fully built out, Equinix expects the total cabinet capacity of the new Secaucus center to support up to approximately 4,700 cabinets.